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10-year Treasury yields log biggest fall since March
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US consumer confidence falls in April
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US default on debt would trigger 'economic catastrophe' -
Yellen
(Updates prices)
By Deep Kaushik Vakil
April 25 (Reuters) -
Gold prices rose on Tuesday as steeply lower Treasury yields countered pressure from a stronger dollar, while investors awaited a slew of U.S. economic data due later this week that could sway the Federal Reserve's interest rate-hike stance. Spot gold was up 0.7% to $2,002.32 per ounce by 2:17 p.m. EDT (1817 GMT), while U.S. gold futures settled 0.3% higher at $2,004.50.
The rival safe-haven dollar rose 0.5%, making bullion
more expensive for buyers holding other currencies, while
benchmark 10-year Treasury yields fell by their
largest amount since March. A weak U.S. consumer confidence report and lacklustre
manufacturing data fanned fears of economic slowdown, lowering
the bets for a rate hike next week.
Markets now see a 73% chance of a 25-basis-point rate hike
at the Fed's May 2-3 meeting. Next on the radar is the quarterly gross domestic product
data scheduled for Thursday followed by the reading on the core
personal consumption expenditures (PCE) index, the Fed's
favoured inflation gauge, on Friday.
"The Fed would do its best to try and hold rates higher in
order to quell inflation but that likely means that it might be
a constraint on the economy growing as quickly," said Everett
Millman, chief market analyst at Gainesville Coins.
"No matter what decision they have to make, it's probably
going to result in some type of stress, and that looming
uncertainty is certainly what gold is going to be sensitive to."
While gold is considered a safe haven during economic
uncertainties, higher interest rates dull appeal for zero-yield
bullion.
Traders also took stock of U.S. Treasury Secretary Janet
Yellen's warning that failure by Congress to raise the
government's debt ceiling would trigger an "economic
catastrophe" that would send interest rates higher for years to
come.
Silver shed 0.5% to $25.04 per ounce, platinum rose 0.8% to $1,090.73 and palladium lost 3.1% to
$1,487.66.
(Reporting by Deep Vakil and Ashitha Shivaprasad in Bengaluru;
Editing by Subhranshu Sahu, Shailesh Kuber and Maju Samuel)
