Gold is little changed near five-week low as higher dollar, bond yields weigh

By Swati Verma

BENGALURU (Reuters) - Gold prices on Thursday were little changed after falling to their lowest in five weeks in the previous session, pressured by a stronger dollar, which held near more than three-month highs, and a rise in U.S. Treasury yields.

Spot gold was up 0.05 percent at $1,323.66 per ounce at 0351 GMT, after falling by as much as 0.9 percent to $1,318.51 in the previous session, its lowest since March 21. U.S. gold futures gained 0.1 percent $1,324.7 an ounce.

"Gold prices are lower because of the stronger dollar," said Peter Fung, head of dealing at Wing Fung Precious Metals in Hong Kong.

 

"At these low levels the market could now attract some physical buying interest ... the market has a very good (physical) support at around $1,310-$1,315 levels," he said.

The dollar index, which measures the greenback against a basket of currencies, was steady at 91.148 after rising to as much as 91.261 in the previous session, its highest since Jan. 12.

"Contributing to this (fall in gold prices) was a rise in the dollar and further increase in Treasury yields above 3 percent, which made holding the precious metal less attractive," ANZ Bank said in a note.

A stronger dollar makes bullion more expensive for holders of other currencies, while higher bond yields dampen demand for non-interest yielding bullion.

The benchmark U.S. Treasury 10-year yield edged above 3 percent on Wednesday as jitters about growing federal borrowing spurred more selling in the U.S. government bonds, paving the path for it to visit levels not seen since July 2011.

A rise in Asian stocks also took some safe-haven demand away from gold.

MSCI's broadest index of Asia-Pacific shares outside Japan bounced back from three-week lows plumbed the previous day.

Markets are now awaiting the European Central Bank's monetary policy decision due later in the day.

The ECB is set to keep policy unchanged on Thursday, playing down worries over recent softness in the euro zone economy and potentially ending its bond purchase scheme by the close of the year.

In other precious metals, silver rose 0.4 percent to $16.59 per ounce after falling over 1 percent in the previous session.

Platinum was 0.6 percent higher at $911.10 per ounce. The metal slid about 2.2 percent on Wednesday.

Palladium slipped 0.4 percent to $973.50 an ounce.

(Reporting by Swati Verma in Bengaluru; Editing by Biju Dwarakanath and Christian Schmollinger)