PRECIOUS-Gold steady as lower Treasury yields counter stronger dollar

BY Reuters | ECONOMIC | 08/16/22 01:49 AM EDT
       * Gold fell to a one-week of $1,772.30 on Monday
    * Focus shifts to U.S. Fed minutes due on Wednesday
    * Dollar hovers near one-week peak

 (Recasts and updates prices)
    By Brijesh Patel
    Aug 16 (Reuters) - Gold prices steadied on Tuesday as a dip
in U.S. bond yields countered pressure from a firmer dollar and
concerns over further rate hikes by the Federal Reserve.
    Spot gold        was up 0.1% at $1,780.95 per ounce, as of
0532 GMT. U.S. gold futures        eased 0.1% to $1,795.90.
    Benchmark U.S. 10-year Treasury yields             fell for
a third session to 2.7788%, reducing the opportunity cost of
holding gold which does not pay any interest.
    Gold prices dropped more than 1% to a one-week low on
Monday, as the dollar climbed to a one-week peak on safe-haven
bid after weak global economic data fanned recession fears.

    "A slew of weak data from China has revived fears of a
global slowdown, which sent the U.S. dollar higher to the
detriment of metals," said Matt Simpson, a senior market analyst
at City Index.
    A stronger dollar makes gold and other commodities priced in
the greenback more expensive for overseas buyers.
    "Gold failed to attract safe-haven flows, and its break of
$1,783 support likely triggered stops along the way. Also,
Friday's mild attempt to close above $1,800 was a clue that all
was not well for gold at those highs," Simpson said.
    Data on Monday showed U.S. single-family homebuilders'
confidence and New York state factory activity fell in August to
their lowest levels since near the start of the COVID-19
pandemic.
    Industrial output in China expanded at 3.8% in July from
year-ago levels, slowing from a 3.9% rise in the prior month.

    Meanwhile, Fed officials have maintained a hawkish tone and
hinted at more rate hikes down the year to tame high inflation.

    Rising U.S. interest rates and a slowing economy could
potentially lead to reduction in demand for bullion.
    Investors now await minutes from the Fed's July meeting due
on Wednesday for clues on further rate hikes.
    Elsewhere, spot silver        slipped 0.3% to $20.20 per
ounce, platinum        fell 0.6% to $928.02 and palladium
was down 0.1% at $2,143.67.

 (Reporting by Brijesh Patel in Bengaluru; Editing by Subhranshu
Sahu, Sherry Jacob-Phillips and Vinay Dwivedi)

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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