PRECIOUS-Gold stalls near 5-month high as higher yields pressure prices

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(iterates, adds comment and updates prices)

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* UBS sees weaker silver price with Fed policy normalization

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* Gold has a strong trend now – Analyst

November 15 (Businesshala) – Gold prices tumbled after a seven-day rally on Monday as US bond yields ticked up, though prices recently hit a five-month high on inflation concerns.

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Spot gold fell 0.3% to $1,858.70 an ounce at 10:02 am ET (1502 GMT), after touching a mid-June high of $1,870.04. US gold futures ended 0.3% lower at $1,862.00.

Bullion gained nearly $100 over the past seven sessions, its longest winning streak since May, as its appeal as a hedge against inflation risk was boosted by data showing a rise in US consumer prices. And major central banks had maintained a neutral stance on interest rates.

Jim Wyckoff, Senior Analyst, Kitco Metals, said gold is back on some regular gains by short-term futures traders, but the upside remains firm.

A hike in interest rates reduces the appeal of non-interest bearing gold as it increases the opportunity cost of the metal.

The US benchmark 10-year Treasury yield rose, adding to the opportunity cost of holding the non-yielding metal.

“If gold doesn’t break above $1,870 today, there is a risk that it could push back into the $1,830-$1,835 zone, as this could frustrate some investors,” warned Saxo Bank analyst Ole Hansen. “

The chairman of the Minneapolis Federal Reserve Bank said on Sunday that he expects higher inflation in the next few months, but said the US central bank should not react to increased inflation because it is likely to be temporary.

“The Federal Reserve’s policy normalization, higher interest rates, the strengthening of the USD and inflationary pressures in 2022 are likely to weaken to a weaker silver price,” analysts at UBS said in a note.

Silver fell 1.3% to $24.95 an ounce.

Platinum rose 0.4% to $1,086.70 and palladium rose 1.7% to $2,145.65. (Reporting by Bharat Govind Gautam and Arundhati Sarkar in Bengaluru; Editing by Amy Caron Daniels)

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