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Markets

Gold stays below $1,900/oz ahead of US inflation data, ECB meeting

  • US 10-year yields touch more than 1-month low.
  • China May factory gate prices rise at fastest in over 12 yrs.
  • Too sharp a rise in inflation rate could pressure gold – analyst.
09 Jun 2021

Gold held in a tight range below the $1,900 an ounce level on Wednesday as investors looked to US inflation data and a European Central Bank meeting for clues on monetary policy and the future of economic support measures.

Spot gold was down 0.2% at $1,889.84 per ounce by 1135 GMT, while US gold futures slipped 0.1% to $1,892.10.

"There's a great deal of uncertainty about the next move in gold prices," Michael Hewson, chief market analyst at CMC Markets said, adding that given the direction of bond yields, gold should have moved much higher.

US benchmark 10-year Treasury yields fell to their lowest in over a month, while the dollar index hovered near the 90 level.

On Thursday, traders will keep a close watch on the ECB's policy meeting to gauge the pace of global recovery, and the US consumer price index report for indications the Fed could taper back stimulus.

"Too sharp a rise in the inflation rate could even weigh briefly on gold as it could fuel speculation about an earlier exit by the US Fed from its ultra-loose monetary policy," Commerzbank analyst Carsten Fritsch said in a note.

US Treasury Secretary Janet Yellen on Sunday noted that a slightly higher interest-rate environment "would be a plus for society's point of view and the Fed's point of view".

The US central bank is expected to hold its policy meeting next week.

Meanwhile data from China showed May factory gate prices rose at their fastest pace in over 12 years, while consumer prices increased for the third straight month.

Among other precious metals, silver fell 0.2% to $27.58 per ounce, palladium eased 0.3% to $2,797.69, while platinum slipped 0.7%, to $1,153.31.

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