Gold prices were steady on Thursday, supported by a pullback in the U.S. Treasury yields and as cautious investors awaited key U.S. nonfarm payrolls report due this week that could offer more cues on the Federal Reserve’s rate-hike stance.
Spot gold held its ground at $1,767.39 per ounce, as of 0239 GMT. U.S. gold futures rose 0.4% to $1,783.90.
Benchmark U.S. 10-year Treasury yields slipped from a more than one-week high, 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.
Fed policymakers this week signaled that the central bank remains resolute in getting U.S. rates up to a level that will more significantly curb economic activity and put a dent in the highest inflation rate since the 1980s.
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 tons 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 fell 0.4% to $19.97 per ounce, platinum was down 0.2% at $896, and palladium eased 0.3% to $2,011.42.