* U.S. Treasury yields hit highest in practically a yr
* Greenback scales 0.2% on increased yields
* Markets await Powell’s testimony to Congress beginning Tuesday (Recasts, provides analyst remark, updates costs)
By Diptendu Lahiri
Feb 22 (Reuters) – Gold costs on Monday bounced again from an over seven-month low hit within the prior session, shrugging off a soar in yields, with buyers choosing the dear steel as a hedge in opposition to rising inflation.
Spot gold rose 0.8% to $1,796.10 per ounce by 1044 GMT. It had fallen to $1,759.29 on Friday, its lowest since July 2. U.S. GCv1 gained 0.7% to $1,793.
“The market is enjoying inflation outlook story and gold is rising as a hedge in opposition to it,” mentioned Quantitative Commodity Analysis analyst Peter Fertig, including that gold’s future is now depending on the speed at which inflation rises.
“Nonetheless, increased bond yields are detrimental for gold, however they’re additionally lending help to the greenback, offsetting some positive aspects within the treasured steel.”
The greenback gained in early European buying and selling as expectations for a sooner financial progress on account of anticipated fiscal assist despatched bond yields increased. USD/ US/
A $1.9 trillion stimulus is extensively anticipated to move by the top of the week, lifting sentiments for an elevated financial restoration, however on the price rising inflation.
Traders are additionally eyeing the testimony of Federal Reserve Chairman Jerome Powell on the Semiannual Financial Report back to Congress starting Tuesday. Fed and different main central banks have pinned their hopes on extremely low rates of interest to get the financial system out of the grasp of a COVID-19-led fall-out.
Increased yields and decrease rates of interest improve the chance price of holding non-yielding bullion.
“The bearish development (in gold) of the previous couple of days is dropping power however a correct inversion would require a strong restoration of $1,800,” ActivTrades chief analyst Carlo Alberto De Casa wrote in a word.
gained practically 1% to $27.48 per ounce, whereas platinum fell 0.1% to $1,272.79.
Palladium was down 0.4% to $2,367.80, having earlier hit an over one-month excessive at $2,431.50.