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U.S. dollar index up 0.1%
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U.S. CPI data due on Feb. 14
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10-year Treasury yields near 5-week high
(Updates prices)
By Kavya Guduru
Feb 13 (Reuters) - Gold prices eased on Monday,
pressured by a firmer dollar as traders squared positions before
the U.S. inflation data, which could influence the Federal
Reserve's roadmap for interest rate hikes, comes out on Tuesday.
Spot gold was down 0.1% at $1,863.38 per ounce, as of
0653 GMT. U.S. gold futures inched up 0.1% to $1,876.90.
Bullion is often seen as a hedge against inflation, but the
opportunity cost of holding it rises when interest rates are
increased to bring down inflation.
"A firmer U.S. dollar and higher Treasury yields continue to
put gold prices under pressure as expectations of a prolonged
disinflation story are being challenged," said Yeap Jun Rong, a
market analyst at IG.
The dollar index edged up 0.1%, making
greenback-priced bullion more expensive for buyers holding other
currencies. Benchmark 10-year note yields hovered
near their highest level since Jan. 6. Philadelphia Fed President Patrick Harker on Friday said he
saw the Fed's policy rate going up to somewhere above 5% and
holding there for a while, and flagged the prospect of rate cuts
in 2024.
Market participants now expect the Fed's target rate to peak
at 5.185% in July. "A cautious tone for gold prices could continue to linger in
the lead-up to the U.S. CPI data, as any upside risks to
inflation being presented could push back against recent dovish
expectations and lead markets to revisit the possibility of
higher-for-longer rates," Yeap said.
The data is likely to show that U.S. monthly consumer prices
climbed 0.4% month-on-month in January, according to a Reuters
survey of economists. "Recent repricing of market expectations around the Fed
tightening could create a short-term headwind for (gold)
prices," analysts at ANZ said in a note. "A further sell-off
could confirm prices falling below $1,800/oz in the short term."
Spot silver fell 0.3% to $21.93 per ounce and
platinum edged 0.1% lower to $943.76, while palladium rose 0.1% to $1,544.14.
(Reporting by Kavya Guduru in Bengaluru; Editing by Rashmi
Aich, Nivedita Bhattacharjee, Subhranshu Sahu and Janane
Venkatraman)
