- Gold resists continuing rise in bond yields- Commerzbank
- U.S. 10-year Treasury yields highest in over two years
- U.S. inflation data for January due on Thursday
Feb 8 (Reuters) - Gold prices edged lower on Tuesday as the dollar rebounded in the run-up to the latest U.S. inflation numbers with investors anticipating the U.S. Federal Reserve would signal aggressive interest rate hikes this year.
Spot gold was down 0.1% at $1,818.00 per ounce by 1305 GMT. U.S. gold futures fell 0.2% to $1,818.80.
Due on Thursday, the U.S. consumer price index for January is expected to show an annual rise of 7.3%, which would be the largest such increase since 1982.
A robust inflation figure could increase pressure on the Fed for faster tightening and raise the opportunity cost of holding non-yielding bullion.
"There's been a very clear hawkish shift in recent months and that's become increasingly the case as price pressures have increased. Another inflation beat on Thursday will likely trigger further concerns and could send ripples through the markets," said Craig Erlam, senior market analyst at OANDA.
Gold, which is considered a hedge against inflation and geopolitical risks, rose to the highest level since Jan. 26 on Monday.
However, prices have been stuck in a range-bound trade since beginning of the year, caught between rising inflation worries and growing expectations of Fed interest rate hikes.
"It's hard to say exactly why gold continues to see so much support. The unstable environment in the markets may be feeding some of the safe haven appeal. But it's more likely to be inflation anxiety," OANDA's Erlam noted.
The dollar index gained 0.2%, while the benchmark 10-year U.S. Treasury yield climbed to its highest in more than two years.
Gold is resisting the continuing rise in bond yields, Commerzbank said in a note.
European Central Bank President Christine Lagarde's less hawkish remarks on Monday also likely contributed to the rise in the gold price, it added.
Silver , meanwhile, fell 0.7% to $22.83, platinum declined 1.3% to $1,006.86 and palladium slipped 1.2% to $2,235.56.
Reporting by Swati Verma in Bengaluru, Additional reporting by Brijesh Patel and Kavya Guduru; editing by Barbara Lewis, Kirsten Donovan
Source: Reuters