Gold prices edge higher as U.S. Treasury yields retreat

Spot gold was up 0.2% at $1,726.84 per ounce

  
An employee uses a hammer to clean a gold ingot during the refining process at AGR (African Gold Refinery) in Entebbe, Uganda, October 4, 2018.

An employee uses a hammer to clean a gold ingot during the refining process at AGR (African Gold Refinery) in Entebbe, Uganda, October 4, 2018.

REUTERS/Baz Ratner

Gold prices edged higher on Tuesday as a retreat in U.S. Treasury yields and optimism over the $1.9 trillion coronavirus relief bill lifted the allure of the non-yielding metal.           

FUNDAMENTALS

Spot gold was up 0.2% at $1,726.84 per ounce by 0046 GMT. U.S. gold futures added 0.1% to $1,723.80.

Benchmark U.S. Treasury yields eased further from a one-year high hit last week as Federal Reserve officials continued to downplay runaway inflation concerns.    

While gold is considered a shield against inflation, higher yields have of late threatened that status, since they translate into higher opportunity cost of holding bullion, which pays no return. 

The U.S. Senate will start debating President Joe Biden's coronavirus relief bill this week, Senate Majority Leader Chuck Schumer said on Monday.           

U.S. manufacturing activity increased to a three-year high in February amid a surge in new orders.            

The European Central Bank slowed its net purchases of debt last week even as borrowing costs jumped in the financial markets, casting a shadow over a nascent recovery in the pandemic-stricken euro zone economy.               

U.S. bank Wells Fargo said it has expanded its precious metals trading business, filling gaps in the market left by the withdrawal of Bank of Nova Scotia (Scotiabank)

Holdings of the world's largest gold-backed exchange-traded fund, SPDR Gold Trust, fell 0.8% to 1,084.5 tonnes on Monday.         

Silver gained 0.5% to $26.60 an ounce, while palladium climbed 0.4% at $2,358.16. Platinum rose 0.7% to $1,193.45.   

DATA/EVENTS (GMT)

0330  Australia  RBA Cash Rate March

0700  UK Nationwide House Price MM, YY  Feb

0855  Germany Unemployment Chg, Rate Sa Feb

1000  EU HICP Flash YY Feb

1000  EU HICP-X F&E Flash YY Feb

(Reporting by Sumita Layek in Bengaluru, Editing by Sherry Jacob-Phillips)

© Reuters News 2021

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