NEW YORK: Gold prices held steady on Monday as rising US Treasury yields countered support from a weak US dollar, while the Federal Reserve’s recent hint at a slower pace of rate cuts in 2025 kept investors keenly awaiting a slew of economic data due this week to shed more light on that view.
Spot gold was little changed at $2,639.90 per ounce by 11:50 a.m. ET (1650 GMT). US gold futures were down 0.1% at $2,651.30.
“Bond yields are back up again, placing pressure on gold,” said Nitesh Shah, commodity strategist at WisdomTree.
However, “reports of Trump aides exploring tariff plans that are not as aggressive as initially thought have helped the US dollar basket depreciate by close to 1%,” Shah said.
Yield on the 10-year US Treasury Note rose to an over one-week high, making non-yielding gold less attractive, while the dollar index slumped 1%, making gold cheaper for overseas buyers.
The Fed’s latest projections in December implied a shift to a more cautious pace of rate cuts this year, with the majority of the policymakers expressing concern that inflation could reignite.
The central bank may need to keep rates higher for longer to address persistent inflation, which remains above its 2% target.
US President-elect Donald Trump takes office on Jan. 20, and his proposed tariffs and protectionist policies are expected to stoke further inflation.
“There’s speculation that Trump is going to pull back on tariffs... If (the prices of) commodities go up, inflation’s going to remain higher for longer,” Phillip Streible, chief market strategist at Blue Line Futures, said.
Market participants now look ahead to the US jobs report on Friday, which could help illuminate the Fed’s policy path going forward.
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