Gold rally clipped by firm dollar, higher US Treasury yields

BY ONOME AMUGE

Gold failed to extend its bullish run as prices eased, pressured by a strengthened dollar and rising United States Treasury yields, which presented stiff resistance to the yellow metal. However, safe-haven demand buoyed by the continuous Ukraine crisis and mounting inflation kept bullion on the radar of a weekly gain.

Spot gold was down 0.3 percent to $1,971.04 per ounce, while US gold futures lost 0.5 percent at $1,974.9 per ounce.

In contrast, the dollar rose 0.5 percent, making bullion expensive for overseas buyers, while the benchmark 10-year Treasury yield’s rise dented gold’s rally.

In a note to Business A.M., Craig Erlam, senior market analyst, UK & EMEA, OANDA, asserted that gold is still showing a strong momentum, with a likelihood of hitting the $2,000 per ounce mark.

“At a time of such aggressive tightening, it’s unclear whether it’s a fear of inflation, the economy or risk that’s driving the move, perhaps all of the above. But there’s no shortage of demand at the moment,” he stated.

Edward Moya, another senior market analyst at OANDA maintained a neutral sentiment, noting that though there are positive indications that gold prices may move upward, the dollar’s continuous rise may keep gold prices within bounds.

“The dollar had quite the run. There was the belief that the rally would pause at the 100 level. But we are seeing further bullish momentum. Fundamentals are still intact for bullish momentum in gold, but a stronger dollar could limit the metal’s prospects for now,” Moya said.

Meanwhile, spot silver lost 0.7 percent at $25.54 per ounce, but recorded a 3.2 percent weekly gain, its highest in over three weeks.

Platinum rose 0.4 percent to $990 per ounce, posting its first weekly gain in six, while palladium was 1.8 percent higher at $2,355.43, but plunged three percent for the week.