Gold prices are falling due to the stability of US and dollar yields; palladium plunge 8%

Gold fell on Monday, pressured by rising US Treasury yields and a firm dollar, while easing supply concerns ahead of Russia-Ukrainian peace talks sent self-catalyzed palladium down about 8%.

Spot gold was down 1.07% at $1,936.36 an ounce by 12:01 PM ET (1601 GMT), while US gold futures were down 0.9% at $1,936.40.

Benchmark 10-year bond yields are at their highest since April 2019, buoyed by bets for aggressive rate hikes by the Federal Reserve to combat spiraling inflation. [US/]

Although gold is considered an inflation hedge, higher US interest rates increase the opportunity cost of holding non-yielding bullion. [USD/]

Jim Wyckoff, chief analyst at Kitco Metals, said weakness in gold should be limited by inflation concerns.

“Anytime we have inflationary pressures as we see it now, history shows that the metals markets have been looked for and I think this will continue to be that way.”

Making bullion more expensive for holders of other currencies, the dollar rose 0.5%.

The safe-haven appeal for gold has also been pressured by hopes of progress in the first face-to-face peace talks between Ukraine and Russia in more than two weeks.

“We’ve seen that a large portion of the war premium on gold has already been cut, but perhaps there is more to cut. So, gold is currently facing significant headwinds,” said independent analyst Ross Norman.

And palladium fell 5.7 percent to $ 2204.61 an ounce, after falling earlier to its lowest level since Jan. 25. The metal has lost nearly 34 percent since hitting its highest level on March 7.

“With regard to palladium, despite the closure of the airspace between Russia and the United States and Europe, alternative routes allow Russia to continue to export palladium. So I think some of the concerns about supply disruptions fade away,” said Giovanni Stonovo, an analyst at UBS.

Platinum fell 1.6 percent to $986.36, while silver fell 1.9 percent to $25.03.

(Reporting by Brijesh Patel and Sehir Darin in Bengaluru; Editing by Amy Karen Daniel and Aditya Soni)

(The title and image for this report may have been reformulated only by the Business Standard staff; the rest of the content is automatically generated from a shared feed.)

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