Gold prices flirt with nearly oneweek low
US, European bond yields rise
Recovery to 1,980 would denote strength analyst

April 3 Reuters Gold prices eased on Monday after OPEC made a surprise announcement of oil output cuts, sparking inflation concerns and raising bets on more central bank rate hikes.

Spot gold was 0.2 lower at 1,964.69 per ounce by 0924 GMT, having earlier slipped to its lowest in nearly a week at 1,949.54. U.S. gold futures were also down 0.2 at 1,982.00.

A kneejerk reaction to OPEC cutting production, with the dollar rising, was pushing gold lower but some bargain hunters were coming in around the 19601965 level, StoneX analyst Rhona O39;Connell said.

Given that energy is a reasonably high component of inflationary forces, there could be more rate hikes expected, which the market is pricing in, she added.

European shares rose as oil heavyweights rallied with higher crude prices, but gains were limited and U.S. and European bond yields rose on renewed inflation fears.

While gold is traditionally considered a hedge against inflation, higher interest rates to rein in rising price pressures tend to dim appeal for the asset since it pays no interest.

CME39;s Fedwatch tool shows that markets see a 60.3 chance of the Fed hiking rates by a quarter point in May.

British manufacturers slipped deeper into decline in March but turned optimistic as cost pressures and supply chain problems eased, which could be viewed positively by the Bank of England…