Gold fell slightly on Thursday under pressure from high US Treasury yields as attention turned to US inflation data for the Federal Reserve’s interest rate hike plan after the Bank Central European reported an increase in July.
The ECB said it would end bond purchases on July 1, then raise rates by 25 basis points later in the month. It will rise again in September and could opt for a bigger move if the inflation outlook does not improve.
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Spot gold fell 0.3% to $1,847.59 an ounce at 12:49 GMT, little changed after the ECB’s decision.
US gold futures fell 0.3% to $1,850.00.
“It looks like the ECB is willing to raise rates, but not particularly aggressively and that’s the sentiment the (gold) market is winning,” said Nitesh Shah, analyst at WisdomTree.
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“Upside inflation surprises are always a catalyst for gold price moves. 50 basis points which will act as a headwind,” Shah added.
Friday’s monthly US consumer price index data could indicate whether the Fed will continue its aggressive tightening policy after July.
Benchmark 10-year US Treasury yields held steady near the key 3% threshold, eroding gold’s appeal.
Rising interest rates increase the opportunity cost of holding non-performing bullion, even though the metal is seen as a safe haven amid political and economic uncertainty.
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“We’ll probably have to wait for tomorrow’s CPI report before we see any sustained movement in either direction, but we’re reassured that ETF (exchange-traded fund) flows into gold yesterday were the strongest. in a month,” said Senior Market Analyst Matt Simpson.
Spot silver fell 0.5% to $21.92 an ounce, while platinum lost 2.1% to $984.71. Palladium fell 0.8% to $1,927.59.
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