Gold still under spell of rising US treasury yields, firmer dollar

BY ONOME AMUGE

Gold stumbled into bearish territory as rising US Treasury yields and a firmer dollar dampened investors’ appetite for the yellow metal, while also hitting a heavy blow on bullion’s safe-haven demand stemming from the Russia-Ukraine war and its resultant impact on the global economy.

Front-month gold futures on New York’s Comex shed $13.90, or 0.7 percent at $1,934.30 an ounce, to post a 2.1 percent loss for the week.

On the other hand, benchmark U.S 10-year Treasury yields extended gains on expectations that the Federal Reserve will aggressively hike interest rates as inflation accelerates at its fastest pace in 40 years.

Also weighing on gold was a firmer dollar index which hit a more than two-year high of 101.34, making dollar-denominated precious metals more expensive and less attractive for buyers using other currencies.

Craig Erlam, senior market analyst at OANDA in a note to Business a.m., explained that gold has been weighed down by a stronger dollar and higher yields as traders anticipate an aggressive tightening from the Federal Reserve.

“High inflation and an uncertain economic environment have been very supportive for the yellow metal and I don’t expect that to change, but the more tightening markets price in, the more resistance we’ll see gold rallies,” he opined.

For other precious metals, spot silver dived 1.3 percent to $24.32 per ounce; platinum lost 0.6 percent to $962.53 per ounce; while palladium was little changed at $2,422.88 per ounce.