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Gold slips as yields tick higher, Powell speech in focus

By Brijesh Patel

(Reuters) – Gold prices slipped on Monday due to a slight uptick in U.S. bond yields, ahead of a speech by Federal Reserve Chair Jerome Powell later this week for more clarity on the interest rate outlook.

Spot gold was down 0.4% at $1,983.49 per ounce by 0444 GMT after rising above the key $2,000 level on Friday. U.S. gold futures fell 0.4% to $1,990.60.

“The major factor that will influence gold in the near-term will be the U.S. 10-year Treasury yields… if you start to see resurgence in yields, gold could break below the key support level around $1,974,” said Kelvin Wong, senior market analyst for Asia Pacific at OANDA.

Benchmark 10-year Treasury yields rose to 4.5910% after hitting a five-week low on Friday, decreasing appeal for non-yielding bullion. [US/] [US/]

Data on Friday showed U.S. job growth slowed in October, and the increase in annual wages was the smallest in nearly 2-1/2 years, pointing to easing labor market conditions.

Soft jobs report raised expectations that the Fed may be done with its rate hiking campaign, sending the dollar to a six-week low. [USD/]

Traders are now pricing in a 95% chance that the U.S. central bank will leave rates unchanged in December and an 86% chance that the first policy easing will come as soon as June.

Investors will be looking out for cues on the Fed’s interest rate path, with at least nine Fed members speaking this week, including Powell’s speech on Nov. 9.

SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, said its holdings rose 0.20% to 863.24 tonnes on Friday. [GOL/ETF]

“ETF holdings have increased by 1 million oz in the last two weeks, as speculators have covered short positions. Even so, golds performance hinges on an end of Fed’s hiking cycle,” ANZ analysts said in a note dated Friday.

Spot silver eased 0.2% to $23.14 per ounce, platinum fell 0.4% to $926.14 and palladium gained 0.5% to $1,124.46.

(Reporting by Brijesh Patel and Anjana Anil in Bengaluru; Editing by Subhranshu Sahu and Sonia Cheema)

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