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Commodities

Gold falls for second month on rising yields, dollar

(Reuters) - Gold prices fell nearly 1% on Tuesday, and were headed for a second consecutive month of declines, pressured by a stronger dollar and as rising U.S. Treasury yields dented the metal’s appeal despite concerns over surging inflation.

FILE PHOTO: Gold bullion is displayed at GoldSilver Central's office in Singapore June 19, 2017. REUTERS/Edgar Su

Spot gold fell 0.7% to $1,842.50 per ounce by 2:06 p.m. ET (1806 GMT), falling nearly 1% earlier in the session to $1,837.99. It was down 2.9% for the month in its biggest decline since last September.

U.S. gold futures settled down 0.5% at $1,848.4.

The dollar index was steady and benchmark U.S. 10-year Treasury yields jumped, dimming the appeal of the non-yielding metal. [USD/][US/]

U.S. Federal Reserve Governor Christopher Waller on Monday advocated for the central bank to raise interest rates at every meeting until inflation is curbed, winding back expectations of a pause in hikes after June and July.

“There is this expectation from the market that Biden might press the Fed to do more to fight these inflationary pressures and as a result we’ve seen a fairly steady dollar and some light pressure on the gold market,” said David Meger, director of metals trading at High Ridge Futures.

U.S. President Joe Biden said he and Jerome Powell will discuss inflation in a White House meeting Tuesday, and pledged to give the Federal Reserve chair space to do his job.

While gold is viewed as a hedge against inflation, rising U.S. interest rates increase the opportunity cost of holding non-yielding bullion and boost the dollar in which gold is priced.

Data on the day showed Euro zone inflation rose to yet another record high in May.

Silver fell 1.8% to $21.55 per ounce, and was down nearly 5.2% for the month.

Platinum rose 1.3% to $971.39 per and was set for its first monthly gain in three.

Palladium was down 1.4% to $2,004.96 and declined 13.6% this month, the most since November.

Reporting by Seher Dareen in Bengaluru; Editing by Amy Caren Daniel and Krishna Chandra Eluri

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