Gold falls as dollar, US bonds rise

Gold falls as dollar, US bonds rise
Gold bars at the Austrian Gold and Silver Separating Plant 'Oegussa' in Vienna, Austria, in this March 18, 2016 file photoi. Gold fell on Thursday as the dollar and US bond yields surged after strong US economic data and support from Federal Reserve Chair Janet Yellen for higher US interest rates. (REUTERS file photo)
Updated 19 January 2017

Gold falls as dollar, US bonds rise

Gold falls as dollar, US bonds rise

LONDON: Gold fell on Thursday as the dollar and US bond yields surged after strong US economic data and support from Federal Reserve Chair Janet Yellen for higher US interest rates.
Better than expected jobs and housing data reinforced the view that the US economy is sufficiently robust to warrant rate rises, turning back recent falls for the dollar and pushing 10-year bond yields to their highest since Jan. 3.
Spot gold fell 0.2 percent to $2,201.76 an ounce by 1609 GMT, having dropped by 1.1 percent in the previous session, its biggest fall since Dec. 15.
In other precious metals, silver was 0.7 percent lower at $16.91 an ounce, platinum eased by 0.8 percent to $954 and palladium was flat at $748.47.
“It looks like the dollar’s rise is back on,” said Georgette Boele at ABN AMRO.
“If you have a higher dollar combined with higher US treasury yields, that’s not a good combination for gold prices.”
US gold futures were down 0.9 percent at $1,201.7. Data released before Yellen’s speech showed that US consumer prices increased in December at their fastest pace in 2-1/2 years, indicating that inflation pressures could be building.
Analysts said that gold’s wobble could signal the end of a rally that had lifted the metal by around 8 percent from a mid-December low to an eight-week high of $1,218.64 on Tuesday.
“It’s kind of running out of steam unless there’s news coming that will bring more money back in,” said Tom Kendall at ICBC Standard Bank. “If you see the market close beneath yesterday’s low, then you’ve got to look for a return back to the mid-1,100s at least.”
Wednesday’s low was $1,201.81. “We are likely to test below ($1,200) once again and target support at $1,190 and $1,180,” analysts at MKS said in a note.