PRECIOUS-Gold eases on robust yields as focus turns on U.S. inflation data

BY Reuters | ECONOMIC | 01/10/22 10:36 AM EST

(Changes throughout, adds comments, updates prices)

* Sentiment on gold is buy-and-hold- analyst

* U.S. 10-year Treasury yields highest in 2 years

* Focus on U.S. CPI data due on Wednesday

By Kavya Guduru

Jan 10 (Reuters) - Gold edged lower on Monday, weakened by a firmer dollar and elevated Treasury yields, as investors focused on key inflation data due later this week that could underpin faster rate hikes by the U.S. Federal Reserve.

Spot gold was down 0.1% at $1,793.86 per ounce at 10:20 ET (1520 GMT), having hit a three-week low on Friday. U.S. gold futures fell 0.2% to $1,794.60.

"We've got inflation working in gold's favor, but yields are pushing prices lower leading to a tug-of-war between these two factors," said Bob Haberkorn, senior market strategist at RJO Futures.

The sentiment on gold is buy-and-hold, with prices settling into a range of around $1,800, Haberkorn added.

U.S. 10-year Treasury yields rose to their highest level in two years, as the dollar ticked up amid bets U.S. inflation will bolster the case for higher interest rates.

Investors now await the inflation data due on Wednesday. U.S. core CPI is expected to have risen to its highest in decades at 5.4% in December, up from 4.9% in the prior month.

Gold is considered a hedge against higher inflation, but rising U.S. interest rates increase the opportunity cost of holding non-yielding bullion, while a stronger dollar makes the precious metal expensive for overseas buyers.

Limiting bullion's losses, stock markets fell on Monday.

"Trader and investor risk aversion is not keen early this week, but neither is their risk appetite," Jim Wyckoff, a senior analyst at Kitco Metals, wrote in a note.

Spot silver rose 0.2% to $22.35, platinum dropped 3% to $926.75 and palladium was down 1.3% at $1,909.09. (Reporting by Kavya Guduru in Bengaluru; Editing by Krishna Chandra Eluri)

In general the bond market is volatile, and fixed income securities carry interest rate risk. (As interest rates rise, bond prices usually fall, and vice versa. This effect is usually more pronounced for longer-term securities.) Fixed income securities also carry inflation risk and credit and default risks for both issuers and counterparties. Unlike individual bonds, most bond funds do not have a maturity date, so avoiding losses caused by price volatility by holding them until maturity is not possible.

Lower-quality debt securities generally offer higher yields, but also involve greater risk of default or price changes due to potential changes in the credit quality of the issuer. Any fixed income security sold or redeemed prior to maturity may be subject to loss.

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