PRECIOUS-Gold stuck in a range as yields rise, rate hike bets increase

BY Reuters | ECONOMIC | 06/21/22 01:03 PM EDT
       * U.S. Fed Chair Powell to testify before Congress this week
    * Palladium rises over 3%
    * U.S. stocks extend gain

 (Adds details and updates prices)
    By Ashitha Shivaprasad
    June 21 (Reuters) - Gold prices were hemmed into a range on
Tuesday as rising U.S. Treasury yields and aggressive rate hike
bets dimmed bullion's appeal despite a pullback in the dollar.
    Spot gold        slipped 0.2% to $1,834.72 per ounce by
12:46 p.m. ET (1646 GMT). U.S. gold futures        dipped 0.2%
to $1,837.50.
    "Treasury yields are slightly higher and there is a small
bounce back in U.S. equities, both putting some pressure on
gold. However, the dollar is down and is offering some support,"
said Phillip Streible, chief market strategist at Blue Line
Futures in Chicago.
    Denting bullion's appeal, benchmark U.S. Treasury 10-year
rose.
    The dollar index        fell 0.3%, making greenback-priced
bullion more attractive for overseas buyers.
    Earlier this month, the U.S. Federal Reserve announced its
biggest interest rate hike since 1994. Following suit, other
major central banks are also leaning towards aggressive monetary
policy tightening to tame soaring
inflation.
    The Fed's Thomas Barkin said an interest rate increase of 50
or 75 basis points at the U.S. central bank's next policy
meeting in July is a good base case.
    "Gold is now caught between expectations of sharper rate
hikes but also inflation remaining elevated if monetary policy
fails to soften economic activity and bring inflation lower,"
Standard Chartered analysts said in a note.
    Inflation and economic uncertainties usually spur safe-haven
buying of gold but rising interest rates increase the
opportunity cost of the non-yielding bullion.
    Fed Chair Jerome Powell will testify in Washington D.C.
later this week.
    "The Fed in the last meeting was at its maximum hawkishness"
and that should decelerate going forward, Blue Line's Streible
said.
    Spot silver        rose 0.7% to $21.72 per ounce, platinum
       gained 0.6% to $937.24 and palladium        rose 2% to
$1,883.25.




 (Reporting by Ashitha Shivaprasad 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.

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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