Gold price creeps back above $1,270/oz as dollar steadies, yields slip

New York (Nov 6)  Gold edged back above $1,270 an ounce on Monday as a steadier tone to the dollar and a drop in bond yields tempted some buyers back to the metal after its third straight weekly decline.

Prices remained under pressure from expectations that the Federal Reserve is on track to lift U.S. interest rates for a third time this year next month.      

Spot gold was up 0.1 percent at $1,271.32 an ounce at 1030 GMT, while U.S. gold futures for December delivery were up $2.60 an ounce at $1,271,80.

The dollar steadied on Monday after its biggest weekly rise this year, while Germany's benchmark bond yield hit a near two-month low as investors awaited clues on the European Central
Bank's asset purchase plans. U.S. 10-year yields also hit their weakest in two weeks.                

Gold was therefore set for another uneventful day despite surrounding event risk linked to U.S. President Donald Trump's visit to Asia, Saxo Bank's head of commodity research Ole Hansen said.

"Gold remains stuck in a $1,263 to $1,282 range, with lower bond yields being offset by a stronger dollar," he said.

"With Trump in Asia we could see North Korea talk heat up at any point," he added. "The Japanese yen was particularly weak
overnight before consolidating and that is probably the key
right now given the supportive turnaround seen in bonds during
the past week."
    Gold has drifted lower over recent weeks, pulling back 2.5
percent from its mid-October peak as expectations for a Fed
interest rate increase were shored up by upbeat U.S. data.
    Gold is highly sensitive to rising U.S. rates, as these
increase the opportunity cost of holding non-yielding bullion
while boosting the dollar, in which it is priced.   
    Holdings of the world's largest gold-backed exchange-traded
fund, SPDR Gold Shares      , declined by just over five tonnes
last week, data from the fund showed, after a 0.3-tonne outflow
on Friday.                 
    Hedge funds and money managers reduced their net long
position in COMEX gold contracts for the seventh straight week,
  in the week to Oct. 31, U.S. Commodity Futures Trading
Commission (CFTC) data showed on Friday.            
    "Speculative financial investors are still withdrawing from
gold," Commerzbank said on Monday. "Net long positions decreased
by a further 2,400 to 166,000 contracts in the week to Oct. 31."
    Among other precious metals, silver  was 0.5 percent
higher at $16.88 an ounce, platinum  was up 0.5 percent at
 $922.80, and palladium  was up 0.5 percent at $1,001.60.

Reuters