Gold flat, pressured by higher U.S. Treasury yields

Gold prices were flat on Wednesday, under pressure as 10-year U.S. Treasury yields held near a four-year high but supported as the U.S. dollar resumed its downtrend and markets awaited a statement from the U.S. Federal Reserve. [US/]

Spot gold edged up 0.1 percent at $1,339.69 an ounce by 1:35 p.m. EST (1835 GMT). U.S. gold futures for February delivery settled up $3.60, or 0.3 percent, at $1,339.

The Fed is expected to leave interest rates unchanged while signalling a gradual tightening of monetary policy this year.

Higher bond yields make gold a less attractive investment because bullion pays no interest.

Benchmark 10-year U.S. Treasury yields crossed above the technically significant level of 2.74 percent earlier this week, said Trey Reik, senior portfolio manager at Sprott Asset Management USA.

"Once you get these big technical break-outs, there is a chance that the Fed will ascribe the traditional factors: expectations for accelerating economic growth, potential impact on inflation," Reik said.

"Opportunities overseas are becoming more attractive, leading people to sell treasuries, which is also putting a little pressure on the dollar," he added.

On track for its biggest monthly drop in nearly two years, a weaker dollar makes commodities priced in the currency cheaper for buyers using other currencies. [FRX/]

Gold prices, boosted by a weaker dollar, headed for a third consecutive monthly gain, up 3 percent so far in January, the biggest monthly increase since August 2017.

Wednesday`s bounce could be a short-term respite from a downtrend that began after gold touched a 1-1/2 year high of $1,366.07 last week.

"Seasonality is starting to fade ahead of the Chinese New Year, so you should not expect too strong physical demand at this point," said Joni Teves, precious metals analyst at UBS in London.

In other precious metals, silver climbed 0.7 percent at $17.25 an ounce after hitting a one-week low of $17.03.

Palladium shed 2.7 percent at $1,026.10 an ounce, hitting a fresh five-week low after a 55 percent gain in 2017. Despite rocketing up to the highest since records dating back to 1990 earlier in January, spot palladium was on track to close the month down 3.3 percent, marking its weakest monthly performance since December 2016 and only its second such drop in the same time frame.

Platinum gained 0.02 percent at $996.20 per ounce. It is up about 8 percent for the month, on track for its best month since January 2017. It hit a one-week low in the previous session.

(This article has not been edited by Zeebiz editorial team and is auto-generated from an agency feed.)