Gold retreated $1,800 as improving risk appetite thwarts lower yields

  • Dollar at 1-week low, Treasury yields lower
  • Gold will be directionless until Fed rate decision – analyst

Feb 2 (Reuters) – The price of gold fell slightly on Wednesday, moving away from the key psychological level of $1,800 as risk appetite boosted by less hawkish comments from U.S. Federal Reserve officials the outweighing support from falling Treasury yields.

Spot gold fell 0.2% to $1,796.90 an ounce, at 0844 GMT. US gold futures fell 0.1% to $1,799.60.

“The shift to a riskier approach by investors is likely gold-negative, however, the resulting dollar weakness is helping gold, and lower US TIPS yields have supported gold,” said Nicholas Frappell, a world general. manager at ABC Bullion.

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“Bullard’s (St. Louis Fed Chairman, James) comments on the subject of a 50 basis point hike are part of a trend among Fed officials to soften the markets view on the pace and the extent of the tightening in 2022.”

A noted hawk, Bullard said on Tuesday he would argue for interest rate hikes in March, May and June, but did not favor a half-point move. Read more

Although gold is considered an inflation hedge, rate hikes would increase the opportunity cost of holding non-performing bullion.

When the Fed makes a solid decision on a rate hike next month, investors will get some direction, said Hareesh V, head of commodities research at Geojit Financial Services in India, adding that until then the gold was probably dull.

Wall Street rose on Tuesday and the energy index closed at a multi-year high, although choppy trading reflected investor uncertainty about how to play in the current market.

The dollar index hit its lowest level in a week, making gold attractive to other currency holders.

Benchmark yields on 10-year US Treasuries fell slightly, limiting losses in non-interest-bearing bullion.

Spot silver gained 0.3% to $22.71 an ounce, platinum rose 0.4% to $1,031.26 and palladium climbed 1.2% to 2,391.99 $.

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Reporting by Asha Sistla in Bengaluru; Additional reporting by Bharat Govind Gautam; Editing by Sherry Jacob-Phillips and Subhranshu Sahu

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