PRECIOUS-Gold climbs as yields retreat with U.S. jobs report in focus

BY Reuters | ECONOMIC | 08/04/22 12:45 AM EDT

* Gold to be range-bound in the near term - analyst

* SPDR Gold Trust holdings drop to 6-1/2-month low (Updates prices and adds details)

By Brijesh Patel

Aug 4 (Reuters) - Gold prices edged higher on Thursday, supported by a pullback in the U.S. Treasury yields, while cautious investors awaited key U.S. non-farm payrolls report due this week for more cues on the Federal Reserve's rate-hike stance.

Spot gold was up 0.3% to $1,769.74 per ounce, as of 0628 GMT. U.S. gold futures rose 0.5% to $1,785.60.

Benchmark U.S. 10-year Treasury yields slipped from their highest levels in more than one week, reducing the opportunity cost of holding non-interest-bearing gold.

"Most of the investors are on the sidelines because there are tensions brewing between U.S. and China, so people are not sure what is going to happen," said Brian Lan, managing director at dealer GoldSilver Central.

"Furthermore, there is also another area that people are thinking that if interest rates are going up, probably holding the dollar might make more sense than holding gold. So I expect gold prices to be range-bound in the near term."

Limiting gold's advance, the dollar hovered near its highest this week after hawkish comments from Fed officials.

U.S. central bank officials voiced their determination to rein in high inflation, although one noted a half-percentage-point hike in its key interest rate next month might be enough to march towards that goal.

Rising U.S. interest rates dull non-yielding gold's appeal.

After a couple of strong economic readings this week, focus now shifts to U.S. jobs data due on Friday that could offer more clarity on Fed's aggressive tightening to fight stubborn inflation.

Indicative of sentiment, holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, fell to their lowest since mid-Jan at 1,000.65 tonnes on Wednesday.

Meanwhile, U.S. House of Representatives Speaker Nancy Pelosi left Taiwan on Wednesday, adding that Chinese anger cannot stop world leaders from travelling to the self-ruled island claimed by Beijing.

Spot silver dipped 0.1% to $20.02 per ounce, platinum fell 0.2% to $896.14, and palladium was 0.3% higher at $2,022.55.

(Reporting by Brijesh Patel and Eileen Soreng in Bengaluru; Editing by Rashmi Aich and 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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