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Gold prices treaded water on Wednesday,
with lower U.S. Treasury yields lending support, as bullion’s
struggle to break out of its range-bound trade continued.
Spot gold was up 0.1% at $1,821.57 per ounce by 0254
GMT. U.S. gold futures firmed 0.1% at $1,823.10.
Helping the appeal of non-yielding bullion, benchmark U.S.
10-year Treasury yields eased on Wednesday after three straight
sessions of gains.
U.S. Federal Reserve policymakers promised further rapid
interest-rate hikes to bring down high inflation on Tuesday, but
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pushed back against growing fears among investors and economists
that sharply higher borrowing costs will trigger a steep
downturn.
“Overall, the outlook for interest rates means that when we
do get a break out of this trading zone we’ve been stuck in now
for a couple of months, it’s more likely to be to the downside,”
said Michael McCarthy, chief strategy officer at Tiger Brokers,
Australia.
Although gold is seen as an inflation hedge, higher
short-term U.S. interest rates and bond yields raise the
opportunity cost of holding bullion, which yields no interest.
“Rising interest rates and a stronger U.S. dollar are acting
against inflation-hedging forces. So we’ve got balance in the
gold market at the moment,” McCarthy said, adding that it is
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very hard to get excited about the prospects for gold, with so
many other markets showing higher volatility.
A stronger U.S. dollar makes gold less attractive for
buyers holding other currencies.
The United States banned new imports of Russian gold, acting
on commitments made by the Group of Seven leaders this week to
further punish Russia over its invasion of Ukraine.
The move, however, is being seen as symbolic, as gold
exports from Russia to the West have already dried up.
Spot silver was flat at $20.84 per ounce, while
platinum rose 0.5% to $914.64 and palladium gained
2% to $1,910.43.
(Reporting by Bharat Govind Gautam in Bengaluru; Editing by
Rashmi Aich and Amy Caren Daniel)
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