(adds comment and updates prices)
* Gold set to break seven-season winning streak
* Gold may go to $1,700 an ounce in 2022, says analyst
* Silver will weaken as inflation pressure eases, says UBS
November 15 (Businesshala) – Gold prices fell on Monday as investors gauged the Federal Reserve’s possible response to higher inflation expectations, but a fall in US bond yields limited the losses.
Spot gold fell 0.1% to $1,862.51 an ounce by 1052 GMT, while US gold futures fell 0.2% to $1,865.00.
Saxo Bank analyst Ole Hansen said gold was again facing some resistance around $1,870, adding that “some gains could be in the market if gold fails to build on recent gains soon.”
Bullion climbed to a nearly five-month high last week as US consumer prices posted their sharpest annual jump in 31 years, forcing investors to put forward their rate hike hopes.
“Since the initial CPI shock, the market is actually lowering some (rate hike) expectations for 2022, and that too, at least in the short term, is providing some support to gold,” Hansen said.
The US benchmark 10-year Treasury yield pulled back, reducing the opportunity cost of non-yielding bullion.
Minneapolis Federal Reserve Bank President Neil Kashkari said on Sunday that he expects higher inflation in the next few months, but said the US central bank should not overreact to increased inflation as it is likely to be temporary.
Warren Patterson, Head of Commodity Strategy at ING, said: “Inflation data has given a boost to gold. However, prices could slide as low as $1,700 through 2022 as rising inflation will mean central banks slow the pace of monetary tightening. Will speed up
A hike in interest rates reduces the appeal of non-interest bearing gold as it increases the opportunity cost of the metal.
Elsewhere, spot silver fell 0.3% to $25.20 an ounce.
Analysts at UBS see a weakening silver price in line with a normalization of Federal Reserve policy, as well as higher interest rates and a easing of inflationary pressure in 2022.
Platinum fell 0.7% to $1,075.15, palladium slipped 0.7% to $2,095.15. (Reporting by Arundhati Sarkar in Bengaluru; Editing by Rashmi Aich)