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PRECIOUS-Gold rises as easing bond yields offset firm dollar

Published 04/03/2021, 09:32 pm
Updated 04/03/2021, 11:48 pm
© Reuters.
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* Powell's comments at virtual Jobs Summit awaited

* U.S. Senate delays debate on $1.9 trillion stimulus bill (Updates prices)

By K. Sathya Narayanan

March 4 (Reuters) - Gold rose on Thursday, buoyed by lower U.S. Treasury yields, but a firm dollar limited bullion's advance and kept it near a nine-month low.

Spot gold XAU= was up 0.5% at $1,719.67 per ounce at 1228 GMT, having dropped on Wednesday to its lowest since June 9 at $1,701.40. U.S. gold futures GCv1 rose 0.1% to $1,717.70.

The U.S. dollar .DXY climbed 0.2% against key rivals, making gold more expensive for investors holding other currencies. USD/

U.S. Treasury yields US10YT=RR US30YT=RR inched down, but were still at elevated levels, while Germany's 10-year yield DE10YT=RR also eased. US/ MKTS/GLOB

"You have two conflicting forces," Quantitative Commodity Research analyst Peter Fertig said.

"However, it is still not an environment, currently, which would argue to be overweight in the precious metals," and rather than overall (yield) levels, it's more the change in bond yields that would impact gold prices, Fertig added.

Gold is considered a hedge against inflation which could result from massive economic stimulus measures, but that status has been threatened by higher bond yields, which increase the opportunity cost of holding non-yielding bullion.

Investors awaited any remarks from U.S. Federal Reserve Chair Jerome Powell on the rapid rise in yields and clues on policy outlook when he speaks at a virtual Wall Street Journal Jobs Summit at 1705 GMT. market will need more than "jawboning" if the Fed is serious about keeping interest rates low and the yield curve would continue to steepen in the absence of that, which is negative for gold, said Howie Lee, an economist at OCBC Bank.

Meanwhile, the U.S. Senate delayed a debate on a $1.9 trillion COVID-19 relief bill until at least Thursday. XAG= was steady at $26.09 per ounce, while palladium XPD= slipped 0.1% to $2,350.68. Platinum XPT= fell 0.5% to $1,160.98 per ounce.

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