PRECIOUS-Gold rises for fourth day as lower U.S. yields offer support

BY Reuters | ECONOMIC | 01/11/23 05:07 AM EST


U.S. CPI data due at 1330 GMT on Thursday


Gold bulls very much in the driving seat - analyst


Indian gold refiners struggle as smugglers offer hefty discounts

(Recasts, adds comments, updates prices)

By Arundhati Sarkar

Jan 11 (Reuters) - Gold prices extended gains to a fourth session on Wednesday as expectations of slower U.S. rate hikes lowered Treasury yields while lifting bullion to a fresh eight-month peak.

Spot gold rose 0.4% to $1,884.98 per ounce by 0946 GMT, its highest level since early May. U.S. gold futures added 0.7% to $1,889.10.

Making gold less expensive for overseas buyers, the dollar index slipped 0.1%, while benchmark U.S. 10-year Treasury yields fell below the 4% mark.

Gold bulls are very much in the driving seat, and if December inflation does indeed cool and increase the expectations of low rates, then we should see the dollar off and by extension, gold higher, said independent analyst Ross Norman.

"On a broader level, it is encouraging to see net long positions on COMEX rise to the highest since June 2022 while redemptions in gold exchange traded funds have also eased, giving scope for further price rises as the tide turns more favourable," Norman added.

The metal has recovered more than $270 from September lows on expectation the Fed would slow the pace of its rate hikes.

But, the risk is that, if CPI surprises to the upside, it could push gold prices back down, said Michael Hewson, chief markets analyst at CMC Markets.

On the technical front, the next level of resistance is $1,900, Hewson added.

Rising U.S. interest rates increase the opportunity cost of holding non-yielding bullion.

Fed Governor Michelle Bowman said on Tuesday that the U.S. central bank will have to raise rates further to combat high inflation and that will likely lead to softer job market conditions.

Meanwhile, in the physical market, Indian gold refiners struggle as grey market operators offer hefty discounts.

Elsewhere, spot silver rose 1.1% to $23.8651 per ounce and platinum gained 0.6% to $1,087.25.

Palladium eased 0.11% to $1,779.44. (Reporting by Arundhati Sarkar in Bengaluru; editing by Jason Neely)

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