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Gold prices inch higher as U.S. dollar, yields slip


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Gold prices ticked up on Thursday as the U.S. dollar and Treasury yields eased, with market participants awaiting new indications on the Federal Reserve’s rate hike plans.

Spot gold was up 0.3% at $1,808.73 per ounce as of 0551 GMT, after dropping 1% in the last session. U.S. gold futures fell 0.1% to $1,814.70.

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The dollar index slipped 0.1%. A weaker greenback makes bullion more appealing to buyers holding other currencies. Benchmark U.S. 10-year Treasury yields eased after hitting a six-week high in the previous session.

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Traders will scan the weekly U.S. jobless claim numbers due at 1330 GMT, for their likely influence on the Fed’s rate-hike strategy.

“Jobless data will be important. If it shows an increase in claims, then it should weaken dollar and support gold,” said Ajay Kedia, director at Kedia Commodities, Mumbai.

The bullion was under pressure for most part of this year, buffeted by rapid rate-hikes from major central banks.

However, prices have risen nearly $200 from a more than two-year low hit in September on hopes the U.S. central bank might slow its pace of interest rate hikes.

The Fed raised interest rates by only 50 basis points (bps) in December after four consecutive increases of 75 bps each, while Fed Chair Jerome Powell has emphasized the need to keep rates elevated for a time to fight inflation.

Higher rates dim gold’s anti-inflationary appeal and increase the opportunity cost of holding the asset since it pays no interest.

“In 2022, gold has already priced in the rate hikes. In 2023, gold will be well supported by geopolitical tensions, recession woes and central bank buying,” added Kedia.

“Gold ETFs (exchange traded funds) are also starting to rise.”

Spot silver gained 0.6% to $23.66, platinum rose 0.7% to $1,015.25 and palladium was up 0.3% to $1,788.38. (Reporting by Ashitha Shivaprasad in Bengaluru; Editing by Uttaresh.V and Krishna Chandra Eluri)


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