Gold recovers from 9-month low as U.S. yields retreat

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Gold prices rose on Tuesday, as a

pullback in U.S. Treasury yields added some luster to the metal

after it hit a nine-month low in the previous session.

Spot gold rose 0.4% to $1,688.41 per ounce by 0539

GMT. Prices had fallen more than 1% on Monday to $1,676.10,

their lowest since June 5.

U.S. gold futures climbed 0.5% to $1,686.70.

“Dip buyers have emerged after the 1.15% fall overnight and

U.S. bond yields have slightly eased, which has provided support

for precious metals,” OANDA senior market analyst Jeffrey Halley

said.

“Gold’s short-term technicals have dipped into oversold

territory, which should provide some temporary support over the

session, however gains are likely to be limited to the $1,700

region.”

U.S. 10-year Treasury yields edged lower,

raising the appeal of holding gold.

A steady rise in bond yields makes holding gold less

attractive as investors typically tend to gravitate toward

assets that generate steady income in the form of interest or

dividend.

“In an environment of rising U.S. yields, growth recovery,

vaccine rollouts, and investors getting more optimistic on

growth prospects; demand for safe havens will struggle,” said

Lachlan Shaw, National Australia Bank’s head of commodity

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research.

While the U.S. Federal Reserve has downplayed the rise in

yields so far, the European Central Bank will discuss on

Thursday the merits of intervening to bring them

down.

“Central banks will need to try and strike a balance between

yields reflating in a reasonable fashion at a reasonable speed,

compared to the recovery in economic activity, and so there may

be tweaks along the way,” Shaw said.

Holdings of the world’s largest gold-backed exchange-traded

fund, SPDR Gold Trust , fell to their lowest since April

2020 on Monday.

Silver rose 0.8% to $25.29 an ounce. Palladium

climbed 0.1% to $2,316.54. Platinum gained 1.2% to

$1,148.97.

(Reporting by Sumita Layek in Bengaluru; Editing by Anil

D’Silva and Aditya Soni)