Gold Prices Eases as US Treasury Yield Rises

On Monday, gold prices fell as the currency and Treasury rates rose on expectations of aggressive interest rate rises by the US Federal Reserve, but renewed fears over Russia’s assault in eastern Ukraine bolstered the safe-haven commodity.

After touching a more than one-week high of $1 949.32 earlier in the day, spot gold was down 0.2 percent at $1 942.93 per ounce as of 0140 GMT. Gold futures in the United States were up 0.2 percent at $1 949.00.

The US dollar index remained stable after breaking over 100 for the first time in almost two years on Friday, fueled by expectations of strong Fed action to combat rising inflation.

A strengthening dollar makes gold less appealing to holders of other currencies.

On Friday, the 10-year US Treasury yield touched 2.73 percent, its highest level since March 2019, as speculators gambled on a more aggressive Fed posture.

The opportunity cost of owning bullion, which is also regarded as a hedge against increasing inflation, rises when US interest rates and yields rise.

On Sunday, Russian soldiers fired missiles and artillery against targets in eastern Ukraine, as Austria’s leader prepared to meet with Russian President Vladimir Putin.

Physical gold discounts extended in India as scrap supplies climbed despite just a minor rise in demand, while purchases in top consumer China remained stable despite Covid-19 lockdowns as investors sought safe-haven assets.

Spot silver remained unchanged at $24.75 per ounce, while platinum increased 0.7 percent to $981.41 per ounce.

After hitting a more than two-week high earlier in the day, palladium was up 2.8 percent at $2 494.48.

The auto-catalyst metal rose 8.6% on Friday after newly refined Russian platinum and palladium were barred from trading in London, effectively blocking access to the metals’ most important trading centre.

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