Gold price dips as dollar firms, yields rise

London (May 15)  Gold dipped on Tuesday, heading for a third straight day of losses as a rise in U.S. borrowing costs supported the dollar and overshadowed the impact of strife in Gaza.

Israeli troops shot dead dozens of Palestinian protesters on the Gaza border on Monday when the high-profile opening of the U.S. embassy to Israel in Jerusalem by the Trump administration raised tension to boiling point.             

But gold investors were fixated on the dollar, which rose versus a currency basket as 10-year U.S. bond yields shot above 3 percent, sending borrowing costs higher in a number of other countries.
    "The market is getting increasingly disappointed about
(gold's) inability to react to those (geopolitical) drivers,"
said Ole Hansen, head of commodity strategy at Saxo Bank.
    "We're up against bond yields, the dollar and the fact that
rising oil prices have at this stage accelerated expectations
for rate hikes in the United States, due to the risk of
inflation."
    Spot gold had dipped 0.2 percent to $1,309.99 per
ounce by 0949 GMT.
    U.S. gold futures for June delivery fell 0.6 percent
to $1,309.70 per ounce.
    A Federal Reserve official this week backed the case for
further interest rate hikes in the United States, saying
inflation had not yet reached the U.S. central bank's 2 percent
goal in a sustained way.            
    Higher U.S. interest rates tend to boost the dollar and push
up bond yields, making greenback-denominated gold more expensive
for holders of other currencies and denting the appeal of
non-yielding assets such as gold.
    "The market's been waiting for the next rate hike by the Fed
... and I think gold prices are going to remain under pressure
till we get through that hike," ANZ analyst Daniel Hynes said in
a note.
    "We're seeing little sparks of interest on the back of
(rising geopolitical tensions) but at the moment it doesn't look
significant enough to raise concerns over the medium term, which
support a more sustained level of safe-haven buying."     
    Holdings of SPDR Gold Trust, the world's largest
gold-backed exchange-traded fund, fell 0.17 percent to 856.17
tonnes on Monday.            
    Spot gold may retest support at $1,302 per ounce, Reuters
technical analyst Wang Tao said.             
    Silver was down 0.4 percent at $16.43 per ounce.
    Platinum was up 0.1 percent at $904 per ounce, while
palladium fell 2 percent to $975.72 an ounce, after
dropping to a more than one-week low at $964.
    Britain's Competition and Markets Authority said on Tuesday
it would examine whether a takeover of miner Lonmin
                by South Africa's Sibanye-Stillwater        
would lessen competition.

Reuters