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Gold fall driven by rising U.S. Treasury yields

Gold prices declined on April 12, amid increasing U.S. Treasury yields and a firmer greenback. Furthermore, better-than-anticipated U.S. economic data pushed prospects for higher inflation.

Spot gold dipped by 0.3% and settled at $1,738.12 per ounce. The U.S. gold futures dropped 0.4% to $1,737.70 per ounce.

According to a strategist at DailyFX, Margaret Yang, stronger-than-anticipated data indicated that inflation will be picking up faster than anticipated in months to come. She added that it is leading to an increase in real yields, exerting pressure on gold.

Moreover, producer prices in America boosted more than expected in March. It resulted in the highest annual growth in nine and a half years and also signaling the start of higher inflation.

Additionally, some investors view the yellow metal as a hedge against higher inflation. However, higher Treasury yields dull some of the appeal of the non-yielding metal.

Federal Reserve Chair Jerome Powell announced the U.S. economy is at an inflection point, hoping that inflation and hiring will accelerate in the following months. Still, there are dangers if a hasty reopening leads to a continuing uptick in COVID-19 infections.

Surging U.S. dollar index is making gold more expensive for holders of other currencies

Moreover, Asian shares declined as investors waited to see whether U.S. results will support sky-high valuations. At the same time, bond markets could be checked this week by what could be very good readings for U.S. inflation and retail sales.

According to Yang, Asia pacific markets were expected to open higher but they are trading lower this morning, increasing demand for safe assets and the greenback is winning that race, putting further pressure on gold.

The U.S. dollar index surged 0.1% versus rival currencies, making gold expensive for buyers outside the United States.

Elsewhere, among other precious metals, silver dropped by 0.4% and settled at $25.13. Meanwhile, palladium decreased by 0.3% to $2,630.78 and platinum fell by 0.6% and hit $1,191.87.

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