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FINWIRES

Gold Steady at a Five-Month Low as the Dollar Moves Lower

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Gold was mostly steady at a five-month low early on Tuesday as the dollar weakened.

Gold for July delivery was last seen down US$2.00 to US$4.36140 per ounce, the lowest since Jan. 2.

The price of the metal has dropped 7.7% over the past month as investors turn to the dollar to hedge against the threat of higher interest rates as inflation rises due to the high oil prices that have followed the U.S. war on Iran. The war has blocked the Strait of Hormuz and shut in much of the 20% of daily oil demand supplied by Persian Gulf nations.

"Gold stabilised after a two-day slump that saw prices break below key technical support, triggering additional selling from short-term momentum-driven traders. However, rising expectations of further US rate hikes, together with higher bond yields and a stronger dollar, continue to create a challenging backdrop for bullion," Saxo Bank wrote.

The dollar eased early, with the ICE dollar index last seen down 0.34 points to 99.71. Treasury yields also eased, with the U.S. two-year note last seen paying 4.151%, down 1.5 basis points, while the yield on the 10-year note is down 1.8 points to 4.55%.

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