Gold declines as US yields rebound

Gulf Today Report 

Gold prices dropped on Tuesday following the weak dollar underpinning the US Treasury yields as it bounces back.

Spot gold was down 0.1% at $1,768.01 per ounce by 07:11 GMT while US gold futures eased 0.1% to $1,769 per ounce.

Ilya Spivak, DailyFX currency strategist said "gold came off Monday's high against a backdrop of rising yields. But the rise in yields didn't echo into the dollar. The greenback's soggy performance is supportive for gold."

The US Treasury yields climbed above 1.6%, increasing the opportunity cost of holding non-yielding bullion.

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Gold is seen as a hedge against inflation that could follow stimulus measures, but higher Treasury yields have dulled some of the appeal of the non-yielding commodity this year.

"As it comes to inflation, the more inflation we get and the less the Federal Reserve is able to ignore that, the worst for gold it is... Technically, gold's trend is still pointing lower," DailyFX's Spivak said.

According to Wang Tao, Reuters technical analyst, spot gold is on the trajectory of declining into a range of $1,744 to $1,758 per ounce, due to its lack of breaking resistance at $1,785.