TD – Gold firms above $1,900/ounce on easing yields, dovish Fed
* Markets await U.S. GDP, jobs data
* U.S. Treasury yields at near two-week low
* Fed can tame inflation without wrecking recovery -Clarida
By Sumita Layek
May 26 (Reuters) – Gold prices firmed above the key $1,900 per ounce level on Wednesday, boosted by weaker U.S. Treasury yields and expectations that the U.S. Federal Reserve will maintain a dovish monetary policy stance. Spot gold was 0.2% higher at $1,903.05 per ounce by 12:03 a.m. EDT (1603 GMT) after hitting its highest since Jan. 8 at $1,912.50. U.S. gold futures gained 0.3% to $1,903.40 per ounce.
“Some of the economic data has been slowing down, and that’s likely to keep Treasury yields grounded, which has been the primary driver in sending gold prices higher,” said Edward Moya, senior market analyst at OANDA. “The market is probably going to have to deal with a slight rebound in the dollar here … but we are still going to see gold prices continue to rise and $1,950 level seems like a very short term goal,” Moya added.
Benchmark U.S. 10-year Treasury yields held near a more-than two week low touched on Tuesday, reducing the opportunity cost of holding non-interest paying gold. The dollar index recovered from lows, making gold expensive for holders of other currencies.
Several Fed officials have reiterated their commitment to a dovish policy stance, while Fed vice chair Richard Clarida on Tuesday said they can curb an outbreak of inflation should it occur without throwing recovery off track. “With investors still sounding the alarm over inflation, institutional interest in the precious metals complex is likely to continue rising following months of outflows, providing an offsetting force against taper fears for the time being,” TD Securities said in a note.
Investors are now looking to U.S. gross domestic product, jobless claims and consumer spending data this week. Elsewhere, palladium fell 0.6% to $2,753.83 per ounce, silver eased 0.5% to $27.84 per ounce and platinum rose 0.5% to $1,197.69 per ounce.
(Reporting by Sumita Layek in Bengaluru; Editing by Kirsten Donovan and Will Dunham)
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