PRECIOUS-Gold inches higher; set for worst quarter in five as dollar shines

BY Reuters | TREASURY | 06/29/22 09:39 PM EDT
       June 30 (Reuters) - Gold firmed on Thursday as U.S. Treasury
yields dipped, but faces its worst quarter since early 2021, as
the dollar cemented its place as the safe-haven asset of choice,
amid top central banks adopting aggressive tactics against
runaway inflation.

    FUNDAMENTALS
    * Spot gold        was up 0.1% at $1,818.31 per ounce by
0115 GMT. U.S. gold futures        also firmed 0.1% to
$1,819.70.
    * Benchmark U.S. 10-year Treasury yields inched down,
increasing the appeal of non-yielding gold.
    * The dollar        ticked up towards recent two-decade
peaks, and could record its best quarter in over five years,
making gold less attractive for buyers holding other currencies.

    * Gold prices, set to drop for a third straight month, have
fallen about 6% this quarter, their worst since the first
quarter of 2021.
    * Bringing down high inflation around the world will be
painful and could even crash growth but must be done quickly to
prevent rapid price growth from becoming entrenched, the world's
top central bank chiefs said on Wednesday.
    * Rate hikes by central banks to fight inflation raise the
opportunity cost of holding bullion, which yields no interest.
    * World Bank's chief economist Carmen Reinhart said she is
skeptical that the U.S. and global economies can dodge a
recession, given red-hot inflation, sharp rate hikes and slowing
growth in China.
    * Spot silver        was flat at $20.71 per ounce, platinum
       rose 0.3% to $919.68, and palladium        gained 0.8% to
$1,977.09. However, they were all still headed for monthly and
quarterly losses.

    DATA/EVENTS (GMT)
    0130  China    NBS Manufacturing PMI          June
    0600  UK       GDP QQ, YY                     Q1
    0600  UK       Nationwide House Price MM, YY  June
    0645  France   CPI (EU Norm) Prelim YY        June
    0755  Germany  Unemployment Rate, Chg SA      June
    0900  EU       Unemployment Rate              May
    1230  US       Consumption, Adjusted MM       May
    1230  US       Initial Jobless Clm            Weekly

 (Reporting by Bharat Govind Gautam in Bengaluru; Editing by
Rashmi Aich)

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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