PRECIOUS-Gold flat as lofty dollar, firmer U.S. bond yields dim appeal

BY Reuters | TREASURY | 05/19/22 01:25 AM EDT
       * U.S. weekly initial jobless claims data due at 1230 GMT
    * Dollar steady after sharp gains on Wednesday
    * 10-year Treasury yields rise

 (Updates prices)
    By Bharat Gautam
    May 19 (Reuters) - Gold prices were flat on Thursday, as an
elevated U.S. dollar and rising Treasury yields weighed on
greenback-priced bullion, with the metal's outlook already
dampened by an aggressive Federal Reserve stance on inflation.
    Spot gold        held its ground at $1,813.96 per ounce, as
of 0512 GMT. U.S. gold futures        were flat at $1,813.40.
    Gold's daily closing price is effectively hugging the
trendline projected from the March 2020 (pandemic) low, and
intraday volatile spikes either side of that key trendline have
lacked conviction to prompt a sustainable move, City Index's
senior market analyst Matt Simpson said.
    Bullion has largely seemed to track daily moves in the
dollar and benchmark U.S. 10-year Treasury yields in recent
weeks, with 20-year highs in the greenback pushing gold prices
to their lowest in well over three months on Monday.
    A stronger dollar makes gold less attractive for buyers
holding other currencies.
    Gold's performance and outlook have also been under the
cloud of an aggressive Fed monetary policy stance on rate hikes
as the bank pushes to rein in soaring inflation.
    Higher U.S. short-term interest rates and bond yields raise
the opportunity cost of holding bullion, which yields nothing.

    Fed Chair Jerome Powell on Tuesday pledged that the U.S.
central bank would ratchet interest rates as high as needed to
kill a surge in inflation that he said threatened the foundation
of the economy.
    "ETF (Exchange traded fund) flows peaked on the 27th of
April and we've since seen a net outflow as investors have lost
confidence in the yellow metal ... And the rout in stock markets
simply added another reason for some investors to convert their
gold to cash," Simpson said.
    Spot silver        was flat at $21.40 per ounce, and
platinum        dropped 0.8% to $927.78, while palladium
rose 0.5% to $2,027.38.


 (Reporting by Bharat Govind Gautam in Bengaluru; Editing by
Sherry Jacob-Phillips)

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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