Gold pauses after hitting two-month highs

  • All precious metals near two-month highs
  • Palladium bounces off supply issues
  • SPDR Gold ETF holdings jump 0.5%
  • The FOMC is due to meet on January 25-26

Jan 20 (Reuters) – Gold prices held near two-month highs on Thursday as falling U.S. Treasury and dollar yields sparked investor interest amid concerns over the inflation and geopolitical lending support.

Spot gold fell 0.2% to $1,836.80 an ounce at 11:02 GMT, after hitting its highest level since November 22 at $1,843.94. US gold futures fell 0.3% to $1,837.30.

“This morning, we are looking at a break from yesterday’s gains. These gains are the result of the market finally finding what we’ve been waiting for for a while, which is using gold as an inflation hedge,” Ricardo Evangelista, analyst principal at ActivTrades mentioned.

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Reflecting investor sentiment, holdings of the world’s largest gold-backed exchange-traded fund, SPDR Gold Trust, jumped 0.5% on Wednesday.

The dollar was lackluster as benchmark US 10-year yields retreated from two-year highs.

Growing geopolitical instability, particularly from tensions between Russia and Ukraine, was also supporting gold, Evangelista said. Read more

Oil prices were trading near their highest levels since 2014.

The US Federal Reserve will meet next week and is expected to tighten monetary policy faster than expected to bring inflation under control, according to a Reuters poll. Read more

Elsewhere, platinum rose 2.1% to $1,043.89 and palladium gained 2.1% to $2,044.30, both to their highest level in two months.

The previous session saw the rally in platinum and palladium for automotive catalysts, which could be linked to supply problems due to Russian-Ukrainian tensions, Commerzbank analysts said in a note.

Possible Western sanctions against Russia, one of the biggest producers of palladium, and an export ban on the metal, so vital to the automotive industry, could lead to a severely undersupplied market, Commerzbank said. .

Silver rose 0.3% to $24.19 an ounce, also a two-month high.

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Reporting by Seher Dareen and Swati Verma in Bengaluru; Editing by Emelia Sithole-Matarise

Our standards: The Thomson Reuters Trust Principles.

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