Gold steady as drop in US Treasury yields offsets firm dollar

SEATTLE (Scrap Monster):  Gold was broadly steady on Friday, as a drop in U.S. Treasury yields eased the opportunity cost of holding bullion, offsetting a firm dollar and signs of progress in U.S.-Iran talks.

Spot gold held at $5,184.69 per ounce by 0301 GMT.

Gold was set for its seventh straight month of gains, rising more than 6% in February, as U.S. tariff uncertainty and mounting U.S.-Iran tensions boosted its safe-haven appeal.

U.S. gold futures for April delivery were up 0.2% at $5,201.40.

"Ten-year U.S. Treasury yields after subtracting inflation, so the real yield has plummeted and that actually is currently a supporting factor, allowing gold to hold steady regardless of the risk premiums ticking down yesterday after U.S.-Iran talks," said Kelvin Wong, a senior market analyst at OANDA.

The benchmark 10-year yield fell to a three-month low on the day, while the dollar was set to gain 0.6% for the month, as indications of a more hawkish Federal Reserve made dollar-priced gold more expensive for holders of other currencies.

The U.S. and Iran made progress in Geneva on Thursday over Tehran's nuclear programme, mediator Oman said, but hours of negotiation ended without a breakthrough to avert potential U.S. strikes amid a massive military buildup.

Meanwhile, Fed Chair nominee Kevin Warsh's path to out-of-the-gate interest rate cuts, in alignment with President Donald Trump's expectations, could be narrowing amid emerging bullishness about the U.S. economy.

The number of Americans filing new applications for jobless benefits increased slightly last week, but the unemployment rate appeared to hold steady in February in a stable labour market.

Markets currently expect three 25-basis-point Fed rate cuts this year, according to CME's FedWatch Tool. FEDWATCH

Spot silver rose 1.6% to $89.79 per ounce, and was headed for a 6.1% gain on the month.

Spot platinum added 3.9% to $2,260.09 per ounce, while palladium gained 1.7% to $1,805.24.

Courtesy: www.reuters.com