PRECIOUS-Gold firms above $1,800/oz in run up to Powell testimony

BY Reuters | ECONOMIC | 01/11/22 10:06 AM EST

(Changes throughout, adds comments, updates prices)

* U.S. CPI data due on Wednesday

* U.S. 10-yr Treasury yield ease off 2-year highs

By Kavya Guduru

Jan 11 (Reuters) - Gold prices firmed above the key $1,800 mark on Tuesday, buoyed by a retreat in the dollar and U.S. Treasury yields, as investors awaited cues on expected policy tightening from Federal Reserve Chair Jerome Powell.

Spot gold was last up 0.1% at $1,803.20 per ounce by 09:47 ET (1447 GMT). U.S. gold futures rose 0.3% to $1,804.00.

Higher crude oil prices, a weaker dollar and a slight pullback in U.S. Treasury yields are supporting gold prices, said Jim Wyckoff, a senior analyst at Kitco Metals.

However, the gold market is going to react negatively to any surprising, hawkish comments from Powell because bulls will look at the U.S. dollar and Treasury bond yields that will probably rise, Wyckoff added.

Although gold is often seen as a hedge against oil-led inflation, higher interest rates will curb the appeal for the non-yielding bullion by increasing its opportunity cost.

U.S. stock indexes fell on Tuesday. Powell is set to appear before the Senate Banking Committee at 10 a.m ET for consideration for a second four-year term as head of the Fed.

Powell had pledged "to prevent higher inflation from becoming entrenched" in comments prepared for delivery at his hearing.

The U.S. core CPI data on Wednesday, which is expected to have risen by an annual 5.4% in December from 4.9% in the prior month, is also on investors' radar.

However, despite higher odds of an earlier start to the Fed's balance sheet runoff, "the yellow metal is within touching distance of the $1,812/oz region which could see a large net long position targeted once again," TD Securities said in a note.

Silver edged up 0.1% to $22.47 an ounce, platinum was up 0.1% at $940.54 and palladium fell 0.4% to $1,905.68.

(Reporting by Kavya Guduru in Bengaluru; Editing by Amy Caren Daniel)

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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