Gold prices ease on firmer US dollar, bond yields

Gold prices edged down on Wednesday due to an uptick in the U.S. dollar and bond yields, while investors assessed the Federal Reserve’s rate-hike trajectory after a closely-watched consumer prices report showed still-high inflation.

FUNDAMENTALS

* Spot gold was down 0.1% at $1,901.24 per ounce, as of 0052 GMT, having briefly slipped below the key $1,900 level earlier in the session. U.S. gold futures fell 0.3% to $1,905.30.

* The dollar index was up 0.1%, making bullion more expensive for buyers holding other currencies. U.S. benchmark 10-year Treasury yields ticked higher.

* The Federal Reserve is seen raising its benchmark rate a quarter of a percentage point at its policy meeting next week and again in May, as a government report showed U.S. inflation remained high in February, and concerns of a long-lasting banking crisis eased.

* The Consumer Price Index (CPI) rose 0.4% last month after accelerating 0.5% in January. In the 12 months through February, the CPI increased 6%, marking the smallest year-on-year gain since September 2021.

* Bullion is often seen as a hedge against inflation, but the opportunity cost of holding the non-yielding asset rises when interest rates are increased to bring down inflation. * Fed Governor Michelle Bowman said on Tuesday the U.S. banking system remains “resilient and on a solid foundation”.

* Spot silver edged down 0.1% to $21.67 per ounce, platinum was 0.1% lower at $981.69 and palladium lost 0.7% at $1,496.61.