Gold Holds Firm as Strong U.S. Treasury Rates Offset Ukraine’s Difficulties.

Gold prices remained stable on Tuesday, as U.S. Treasury rates rose to multi-year highs in response to the Federal Reserve chairman’s aggressive inflation stance, but the increasing crisis between Russia and Ukraine boosted demand for the safe-haven gold.

By 0605 GMT, spot gold remained unchanged at $1,936.03 per ounce. Gold futures in the United States were up 0.5 percent to $1,938.80.

“There are no new inputs to meaningfully change the price in Asia today,” said OANDA senior analyst Jeffrey Halley, “leaving gold locked between rising U.S. rates and a ramp-up in risk-aversion sentiment.”

Chairman of the Federal Reserve, Jerome Powell, said the US central bank will raise interest rates by larger-than-usual amounts if required to combat “far too high” inflation. find out more

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For the first time since May 2019, the yield on the benchmark 10-year Treasury note surpassed 2.3 percent, as the spread between two- and 10-year Treasury notes narrowed further, perhaps signaling an impending economic slowdown.

Sharp changes in the US Treasury market are increasingly pointing to the possibility of a recession, with markets questioning the Federal Reserve’s strategy to make a “soft landing” for the economy as it raises interest rates to combat inflation, according to market analysts. find out more

The opportunity cost of holding non-interest paying gold tends to rise as yields and interest rates rise.

Ukraine’s comment on Monday that it would not accept Russian ultimatums after Moscow demanded that it quit defending beleaguered Mariupol slowed gold’s drop.

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“The Ukraine (war) is expected to worsen, raising supply-chain difficulties and inflationary pressures, which will strengthen gold,” said Nicholas Frappell, worldwide general manager of ABC Bullion.

Palladium slid 0.4 percent to $2,574.04 per ounce, a price used by manufacturers in catalytic converters to reduce pollution.

Spot silver increased by 0.5 percent to $25.33 per ounce, while platinum increased by 0.2 percent to $1,039.46 per ounce.

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