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Gold Reclaims $1,900 As Dollar And Yields Slide After US Data

Gold prices edged above $1900 on June 11, 2021, supported by a pullback in the dollar and lower bond yields. The data that showed a surge in US inflation was perceived to be inadequate to change the Federal Reserve’s easy monetary policy.

Spot gold was up by around 0.1% trading at $1,900.51 per ounce at 0313 GMT, and prices have gained over 0.5% this week. The US gold futures rose 0.3% to trade at $1,902.90 per ounce.

Market data showed that US consumer prices gained significantly in May, leading to the largest annual increase in almost 13 years. The weekly jobless claims dropped to their lowest in almost 15 months in the past week. Jeffrey Halley, senior market analyst at OANDA said:

“The rise in U.S. inflation failed to spark a tapering sell-off. That saw bond yields edge lower helping gold to bounce back. The FOMC next week is now likely to be a non-event and barring a sharp rise in the dollar. Gold looks set to test resistance at $1,920 early next week, as the asset price appreciation trade gains new momentum.”

The benchmark US Treasury yields plunged to a 3-month low, minimizing the opportunity cost of holding non-interest-bearing bullion. In the meantime, the dollar index lost 0.1% after reaching a near one-week high in the past session. On June 10, the European Central Bank kept its monetary policy constant and pledged a steady flow of stimulus over this summer.

Focus now shifts to the Fed’s June 15-16 policy meeting. The Federal Reserve might announce in August or September a method of reducing its huge bond-buying program. However, it would not start trimming the monthly purchases until early 2022, according to a Reuters poll.

Silver gained 0.5% to trade at $28.10 per ounce, while platinum was trading steadily at $1,151.47. On its part, Palladium lost 0.3% to trade at $2,768.65 and was on track for a weekly decline.

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