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Gold steady as higher yields, dollar counter inflation risks

01/16/2022 | 11:24pm EDT

(Adds comments, updates details and prices)

* Geopolitical tensions positive for gold prices - analyst

* Spot gold remains neutral in $1,815-$1,830/oz range - technicals

* U.S. 10-year Treasury yields hover close to two-year peak

Jan 17 (Reuters) - Gold prices held steady on Monday as market participants gauged the global economic policy outlook, with inflation-based demand for bullion countering hawkish comments from U.S. Federal Reserve officials which lifted the dollar and Treasury yields.

Gold is considered an inflationary hedge, but the metal is highly sensitive to rising U.S. interest rates, which increase the opportunity cost of holding non-yielding bullion.

Spot gold rose 0.2% to $1,820.80 per ounce by 0807 GMT. U.S. gold futures rose 0.3% to $1,821.20.

"Gold has been locked in sideways consolidation for a while now, the market is still undecided on where it's going," OCBC Bank economist Howie Lee said. "There's still some lingering demand as an inflation hedge."

U.S. 10-year Treasury yields hovered near two-year highs scaled in the previous week.

Traders await speeches from Fed officials this week ahead of the central bank's Jan. 25-26 policy meeting, but there have been more than enough hawkish comments to see the market almost fully price in a first interest rate hike for March and rates of 1.0% by the year-end. <0#FF;>

"The potential 'black swan' event of whether or not Russia invades Ukraine and then if China makes a simultaneous move on Taiwan is adding upside pressure to the gold price," said Michael Langford, director at corporate advisory AirGuide.

"This ongoing uncertainty will see gold prices stabilise around current levels until more clarity exists."

The dollar index held on to Friday's gains, as investors braced for the Fed meeting and raised bets it will chart a year ahead containing several rate hikes.

Spot gold remains neutral in a range of $1,815 to $1,830 per ounce, and an escape could suggest a direction, according to Reuters' technical analyst Wang Tao.

Spot silver gained 0.3% to $23.02 an ounce, platinum rose 0.1% to $970.82, and palladium was up 0.7% to $1,890.29.

(Reporting by Asha Sistla in Bengaluru, additional reporting by Seher Dareen; Editing by Uttaresh.V, Sherry Jacob-Phillips and Ed Osmond)


ę Reuters 2022
Stocks mentioned in the article
ChangeLast1st jan.
AUSTRALIAN DOLLAR / US DOLLAR (AUD/USD) 0.79% 0.703 Delayed Quote.-4.31%
BRITISH POUND / US DOLLAR (GBP/USD) 1.01% 1.24466 Delayed Quote.-9.40%
CANADIAN DOLLAR / US DOLLAR (CAD/USD) 0.23% 0.78 Delayed Quote.-2.04%
DOW JONES FXCM DOLLAR INDEX -0.36% 12751.28 Real-time Quote.5.39%
EURO / US DOLLAR (EUR/USD) 0.36% 1.04756 Delayed Quote.-8.55%
GOLD 0.05% 1827.5 Delayed Quote.-0.89%
INDIAN RUPEE / US DOLLAR (INR/USD) 0.30% 0.01289 Delayed Quote.-3.88%
NEW ZEALAND DOLLAR / US DOLLAR (NZD/USD) 0.81% 0.6362 Delayed Quote.-7.99%
ON SEMICONDUCTOR CORPORATION -1.83% 55.15 Delayed Quote.-18.80%
PALLADIUM 0.30% 2026 Delayed Quote.2.73%
S&P GSCI GOLD INDEX 0.66% 1066.9 Real-time Quote.-0.75%
SILVER 0.67% 21.73 Delayed Quote.-8.91%
US DOLLAR / RUSSIAN ROUBLE (USD/RUB) 0.67% 64.301 Delayed Quote.-13.93%
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