Gold slips on stronger dollar, yields as focus turns to Fed meet

2 minute read
Register now for FREE unlimited access to
  • 10-year U.S. Treasury yields hit two-year high
  • Gold could trade in $1,780-$1,830 range after first rate hike - analyst
  • Dollar ticks up to 1-week high

Jan 19 (Reuters) - Gold prices fell on Tuesday, as the dollar and U.S. Treasury yields strengthened with investors turning their attention to next week's Federal Reserve policy meeting for more signals on its rate hike timeline.

Spot gold was down 0.3% at $1,813.08 per ounce by 13:49 ET (1849 GMT), while U.S. gold futures settled 0.2% lower at $1,812.40.

"If the Fed hikes rates next week, gold could see a selloff below $1,800. But, it'll be a temporary low because the market will know the Fed is in a bad position if it hikes rates before March," said Bob Haberkorn, senior market strategist at RJO Futures.

Register now for FREE unlimited access to

Following the first rate hike, gold prices could trade in a range of $1,780-$1,830, Haberkorn added.

Benchmark 10-year U.S. Treasury yields touched a two-year peak, while the dollar hit a one-week high, making gold expensive for overseas buyers.

While gold is considered an inflationary hedge, it is highly sensitive to rising U.S. interest rates, which increase the opportunity cost of holding non-yielding bullion.

U.S. stock indexes fell on Tuesday, limiting bullion's losses.

"We are at a path for higher yields throughout the year which will limit the upside to gold, but the inflation story keeps gold going here," Haberkorn said.

Global investor attention remains fixed on the Fed's Jan. 25-26 meeting after officials signalled they would start raising interest rates in March to curb inflation. read more

"Gold is in for a choppy period, but the medium-term outlook still remains bullish if prices can hover around the $1800 level. Gold will remain an inflation hedge for much of Latin America and the emerging world," Ed Moya, a senior market analyst at brokerage OANDA, wrote in a note.

Spot silver was up 1.8% at $23.42 an ounce, platinum rose 1% to $981.50 and palladium rose 1.5% to $1,903.17.

Register now for FREE unlimited access to
Reporting by Kavya Guduru in Bengaluru; Editing by Ramakrishnan M. and Vinay Dwivedi

Our Standards: The Thomson Reuters Trust Principles.