Gold hits over one-week low as firm Treasury yields, dollar dim appeal

Gold hits over one-week low as firm Treasury yields, dollar dim appeal

Gold prices hit a more than one-week low on Wednesday, as a firmer U.S. dollar and Treasury yields continued to weigh on bullion demand.

Spot gold was down 0.3% at $1,944.77 per ounce, as of 0206 GMT, after hitting its lowest since April 11. U.S. gold futures fell 0.6% to $1,947.70.

On Tuesday, prices fell up to 1.8% as a stronger dollar and rising Treasury yields overshadowed inflows into bullion.

"With the U.S. dollar still firm today, and with China declining to lower its 1 and 5-year loan prime rates, it looks like the long squeeze (in gold) is continuing in Asia," said OANDA senior analyst Jeffrey Halley.

The dollar held near recent highs, making greenback-priced gold less attractive for other currency holders.

China kept its benchmark lending rates for corporate and household loans steady at its April fixing, defying expectations, as Beijing has become more cautious in rolling out easing measures to aid a slowing economy.

U.S. Treasury yields continued to surge to multi-year highs as investors prepared for the Federal Reserve to aggressively raise rates as the central bank tries to stem soaring inflation.

Gold is highly sensitive to rising U.S. interest rates and higher yields, which increase the opportunity cost of holding non-yielding bullion.

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