PRECIOUS-Gold inches lower as firmer bond yields dent appeal

BY Reuters | ECONOMIC | 06/16/24 09:55 PM EDT

June 17 (Reuters) - Gold prices edged lower on Monday, weighed down by higher U.S. Treasury yields, as market participants looked out for more economic data to gauge when the Federal Reserve will start cutting its interest rates.

FUNDAMENTALS

* Spot gold was down 0.3% at $2,326.78 per ounce, as of 0126 GMT. U.S. gold futures fell 0.3% to $2,341.70.

* Benchmark 10-year U.S. Treasury yields edged up and were last at 4.2402%, making non-yielding bullion less attractive for investors.

* Data released last week showed that consumer prices were unchanged in May for the first time in nearly two years, while producer prices unexpectedly fell.

* However, updated economic projections from Fed officials after a two-day policy meeting - where the central bank kept interest rates steady - showed just one quarter-point cut for this year.

* Minneapolis Fed President Neel Kashkari on Sunday said it's a "reasonable prediction" that the U.S. central bank will cut interest rates once this year, waiting until December to do it.

* Lower interest rates reduce the opportunity cost of holding non-yielding bullion.

* Gold demand in India remained tepid last week despite a recent correction in prices, as buyers postponed purchases in the absence of any major festivals, while premiums in top consumer China slid on weak consumer sentiment and elevated spot prices.

* China still has room to lower interest rates, but its ability to adjust monetary policy faces internal and external constraints, the official Financial News said, citing industry experts.

* Spot silver fell 0.3% to $29.46 per ounce, platinum was unchanged at $957.57 and palladium gained 0.5% to $894.37.

DATA/EVENTS (GMT) 0200 China Urban Investment (YTD) YY May 0200 China Retail Sales YY May 0200 China Unemp Rate Urban Area May n/a UK House Price Rightmove MM, YY June (Reporting by Sherin Elizabeth Varghese in Bengaluru; Editing by Subhranshu Sahu)

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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