PRECIOUS-Gold ticks up as softer dollar offsets firm U.S. bond yields

BY Reuters | TREASURY | 05/17/22 02:02 AM EDT
       * USD off 20-year peaks
    * Palladium dips after surging in the previous session
    * Gold prices stabilize after volatile Monday

 (Updates prices)
    By Bharat Gautam
    May 17 (Reuters) - Gold prices firmed on Tuesday, as a
pullback in the dollar supported demand for greenback-priced
bullion and countered pressure from a recovery in U.S. Treasury
yields.
    Spot gold        was up 0.1% at $1,826.29 per ounce by 0733
GMT. U.S. gold futures        gained 0.6% to $1,825.00.
    The dollar        fought for a footing after falling from
near 20-year highs while the tumbling Chinese yuan found a
floor, as investors trimmed bets on whether U.S. interest rate
hikes will drive further gains.
    A weaker dollar makes gold more attractive for buyers
holding other currencies.
    However, benchmark U.S. 10-year Treasury yields climbed,
limiting demand for zero-yield gold.
    "Now that we have the much-needed clearout on gold markets,
longer-term holders could start to position for the eventual
southbound turn on the U.S. hard economic data," said Stephen
Innes, managing partner at SPI Asset Management.

    Bullion is seen as a safe haven during economic crises and a
hedge against inflation.
    Gold slid to a 3-1/2-month low on Monday, but reversed
course later, tracking a fall in Treasury yields.
    Spot gold may bounce more into a range of $1,840 to $1,849
per ounce, as the downtrend from the April 18 high of $1,998.10
may have reversed, Reuters' technical analyst Wang Tao said.
    Spot silver        edged up 0.1% to $21.62 per ounce, while
platinum        dropped 0.7% to $939.57 and palladium
fell 0.8% to $2,011.11.
    "With China on the verge of reopening and likely adding more
stimulus, it benefits all hard commodities. And palladium is
ultimately used in industrial applications, particularly within
the auto sector; that segment could benefit from ports reopening
in China," Innes said.
    Improving demand and lower supply will help palladium and
rhodium swing back into deficit this year and reduce platinum's
surplus, consultants Metals Focus said on Monday.


 (Reporting by Bharat Govind Gautam in Bengaluru; Editing by
Rashmi Aich and Sherry Jacob-Phillips, Kirstne Donovan)

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.

Before investing, consider the funds' investment objectives, risks, charges, and expenses. Contact Fidelity for a prospectus or, if available, a summary prospectus containing this information. Read it carefully.

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