Gold recovers from over 2-month low as treasury yields retreat

Gold prices inched up on Thursday, recovering from a more than two-month low hit in the previous session as U.S. Treasury yields retreated, although a stronger dollar kept bullion’s gains in check.

FUNDAMENTALS

Spot gold was up 0.1% at $1,777.06 per ounce by 0012 GMT, having dropped to its lowest since Nov. 30 at $1,768.60 on Wednesday. U.S. gold futures rose 0.3% to $1,777.40.

Benchmark 10-year Treasury yields retreated from near one-year peak on Wednesday. Higher yields increase the opportunity cost of holding the non-yielding bullion.

The dollar climbed to a more than one week peak on Wednesday against rivals, making gold expensive for holders of other currencies.

U.S. retail sales rebounded sharply in January and manufacturing activity rose, while U.S. producer prices increased by the most since 2009, suggesting inflation was starting to creep up.

Gold is often viewed as a hedge against inflation.

Federal Reserve officials last month debated how to lay the groundwork for the public to accept higher inflation, minutes of the U.S. central bank’s Jan. 26 to 27 policy meeting showed.

U.S. President Joe Biden told 10 top union leaders on Wednesday that his $1.9 trillion coronavirus relief plan and a separate measure to modernize U.S. infrastructure would boost the U.S. economy and create millions of jobs.

A laboratory study suggests that the South African variant of the coronavirus may reduce antibody protection from the Pfizer Inc/BioNTech SE vaccine by two-thirds, and it is not clear if the shot will be effective against the mutation.

Silver eased 0.1% to $27.33 an ounce. Platinum gained 1.4% to $1,271.15 and palladium added 0.2% to $2,376.76.

DATA/EVENTS (GMT)

1330 US Housing Starts Number Jan
1330 US Initial Jobless Clm Weekly
1330 US Philly Fed Business Indx Feb
1500 EU Consumer Confid. Flash Feb

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