PRECIOUS METALS SCORE GAINS

GOLD PRICES climbed above the key $1 800 (about R28 147) mark yesterday, buoyed by a retreat in the dollar and US Treasury yields, as investors awaited cues on expected policy tightening from Federal Reserve chairperson Jerome Powell.

Spot gold was last up 0.82 percent at $1 816.13 an ounce by 6.40pm. US gold futures rose 0.3 percent to $1 804 an ounce.

Higher crude oil prices, a weaker dollar and a slight pullback in US Treasury yields were supporting gold prices, said Jim Wyckoff, a senior analyst at Kitco Metals.

However, the gold market would react negatively to any surprising, hawkish comments from Powell because bulls would look at the US dollar and Treasury bond yields that would probably rise, Wyckoff added.

Although gold is often seen as a hedge against oil-led inflation, higher interest rates will curb the appeal for the non-yielding bullion by increasing its opportunity cost.

US stock indices fell yesterday. Powell was set to appear before the Senate Banking Committee last night for consideration for a second fouryear term as head of the Fed.

Powell had pledged “to prevent higher inflation from becoming entrenched” in comments prepared for delivery at his hearing.

The US core CPI data out today, which is expected to have risen by an annual 5.4 percent in December from 4.9 percent in the prior month, is also on investors’ radar.

However, despite higher odds of an earlier start to the Fed’s balance sheet runoff, “the yellow metal is within touching distance of the $1 812/oz region which could see a large net long position targeted once again,” TD Securities said in a note.

Silver edged up 0.1 percent to $22.47 an ounce, platinum was up 0.1 percent at $940.54 an ounce and palladium fell 0.4 percent to $1 905.68 an ounce.