Gold is largely unchanged as Ukraine risks facing higher US Treasury yields

Posted by Suhair Darin

(Reuters) – Gold held steady on Tuesday as safe-haven demand spurred by the prospect of new sanctions on Russia countered rising US Treasury yields and expectations of a Federal Reserve interest rate hike.



Gold XAU = spot, largely unchanged at $1,931.61 an ounce by 10:40 AM ET (1440 GMT), trading in a tight range. US GCv1 gold futures rose 0.1% to $1935.20.

On Tuesday, the European Commission proposed new sanctions against Russia over its invasion of Ukraine, including a ban on purchases of Russian coal and Russian ships entering EU ports, and said it was working to ban oil imports as well. (Full Story)

“Geopolitical risks are likely to be the primary driver in the short term, and this should help gold expand its trading range ($1900-$1950), as you could see prices reach $1,975″.

“There is still a good chance of it (gold rising to $1,975), but you never know how the market will react to these (Fed) minutes.”

On Wednesday, investors waited for the release of the minutes of the Federal Reserve’s latest policy meeting for clues on the path of a rate hike. Higher interest rates in the United States increase the opportunity cost of holding unprofitable gold, while strengthening the dollar.

Yields on benchmark 10-year Treasuries rose after Federal Reserve Governor Lyle Brainard said she expects systematic interest rate increases and rapid reductions in the central bank’s balance sheet to make US monetary policy “more neutral” later this year. (Full Story)

The DXY also benefited from safe haven flows, curbing the appetite of overseas buyers for gold. American dollar/

“We are seeing a new peak in real yields in the US, and that really keeps the (gold) market closed somewhat within a certain range,” said Ole Hansen, analyst at Saxo Bank.

Spot silver XAG = rose 0.4% to $24.59 an ounce, platinum XPT fell 1.8% to $968.84, while palladium XPD rose 0.7% to $2291.06.

(Reporting by Sihir Darin and Elaine Suring in Bengaluru; Editing by Paul Simao)

(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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