Gold prices stagnate as firmer US yields hurt appeal

Jan 18 (Reuters) – Gold prices were flat on Tuesday as a weaker dollar partially offset pressure from high U.S. Treasury yields, which are dampening the appeal of non-yielding bullion.

FUNDAMENTALS

* Spot gold held ground at $1,818.87 an ounce, at 0022 GMT. US gold futures edged up 0.1% to $1,818.50.

* Treasury yields rose along the curve on Tuesday, lifting the short end to new pandemic highs on rate hike expectations.

* The focus is now on the US Federal Reserve’s Jan. 25-26 meeting after policymakers signaled they would start raising interest rates in March to tame inflation. Read more

* Gold is considered an inflation hedge, but the metal is very sensitive to rising US interest rates, which increases the opportunity cost of holding non-interest bearing bullion.

* The US dollar weakened slightly and hovered near its lowest level in two months, making greenback-priced gold more attractive to overseas buyers.

* The Bank of Japan is expected to revise its inflation forecast upwards on Tuesday and acknowledge emerging signs of a shift in the country’s deflationary mindset, as stubbornly high global commodity costs prompt more companies to raise prices. Read more

* Australian consumer confidence took a hit last week as an explosion of coronavirus cases triggered self-imposed lockdowns, crushing spending and gouging holes in supply chains. Read more

* The global labor market will take longer to recover than previously thought, with unemployment expected to remain above pre-COVID-19 levels until at least 2023 due to uncertainty over evolution and duration of the pandemic, the International Labor Organization said in a report on Monday. .

* Spot silver rose 0.1% to $23.02 an ounce, platinum rose 0.3% to $974.43 and palladium was flat at $1,874.66.

Reporting by Bharat Govind Gautam in Bengaluru; Editing by Sherry Jacob-Phillips

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