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PRECIOUS-Gold gains as U.S. Treasury yields ease

Published 21/04/2021, 12:20 am
© Reuters.
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* Spot gold may enter $1,744-$1,758 range, technicals show

* Gold could stay in $1,760-$1,810 range in near-term- analyst (Updates prices)

By Arpan Varghese

April 20 (Reuters) - Gold prices rose on Tuesday as a drop in U.S. Treasury yields lifted the non-yielding precious metal's appeal.

Spot gold XAU= rose 0.5% to $1,777.43 per ounce by 2:01 p.m. EDT (1801 GMT). U.S. gold futures GCv1 settled up 0.4% to $1,778.40.

"Gold's recent upward momentum has been driven by the fact that bonds are well bid and the USD is under pressure," said Tai Wong, head of base and precious metals derivatives trading at BMO.

U.S. Treasury yields eased, while the dollar index .DXY was up 0.2% but hit its lowest level in about seven weeks earlier in the session. US/

"Gold is likely to hold in the new range of $1,760-$1,810 until we get another clear market driver. We may need to wait for the FOMC (Federal Open Market Committee) and see if there's a change in tone as well as how the next round of Treasury auctions go, but overall bonds feel in demand," Wong said.

The U.S. central bank's rate-setting FOMC will hold its next policy meeting April 27-28.

Gold, considered a hedge against inflation given the unprecedented stimulus doled out by central banks, has been in a tussle with yields, since higher yields translate into a higher opportunity cost of holding the non-interest bearing bullion. US/ USD/

Gold can still move higher as "there is too much liquidity in the market and it is going to stay that way for quite some time, even though we have got the green shoots of recovery looking quite strong in certain regions," StoneX analyst Rhona O'Connell said.

On a technical note, gold's failure to break resistance at $1,785 may drive it back to a range of $1,744 to $1,758, Reuters technical analyst Wang Tao said. TECH/C

Silver XAG= fell 0.1% to $25.78 an ounce, palladium XPD= dropped 1.7% to $2,763.19 and platinum XPT= slipped fell 1.5%, to $1,188.01.

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