PRECIOUS METALS STRONGER

GOLD firmed yesterday tracking a slight retreat in US Treasury yields and dollar, while investors eyed an aggressive interest rate hike from the US Federal Reserve (Fed) when it concludes its two-day policy meeting.

Spot gold price was up 0.7 percent to $1 875.10 (about R29 906) an ounce by 5.02pm. Prices had hit $1 849.90 earlier in the session, its lowest level since February 16. US gold futures were up 0.7 percent at $1 876.90 an ounce.

“Gold in recent weeks has dropped significantly as the yield curve has moved up. Today a slight retreat in yields is supporting gold prices… Gold is going to be fairly range-bound,” said head of commodity strategies at TD Securities, Bart Melek.

“Gold has pretty much priced in a fairly aggressive set of policy moves for the Fed meeting. But, if we continue to see poor economic data, then market is going to question Fed’s commitment.”

US benchmark 10-year Treasury yields backed off the 3 percent level yesterday.

Meanwhile, the dollar index was down 0.3 percent, making bullion less expensive to other currency holders. Market participants expect the Fed to raise rates by 50 basis points at the end of a two-day meeting tonight in order to rein in soaring inflation, while comments by chairman Jerome Powell will be scanned for further signals on rate hikes.

While gold is perceived as an inflation hedge, higher US interest rates lift the opportunity cost of holding zero-yield bullion.

“The sharply higher dollar against both the Indian rupee and Chinese renminbi, the world’s biggest buyers of physical gold may trigger a challenging period for gold, until buyers adapt to higher levels,” Saxo Bank analyst Ole Hansen said in a note.

Spot silver edged up 0.5 percent at $22.75 an ounce. Platinum price rose 2.8 percent to $961.77 and palladium advanced 2.1 percent to $2 263.32 an ounce.