Gold prices fall as US yields rise, bets on larger price increases

By Eileen Suring

(Reuters) – Gold fell on Tuesday as rising US Treasury yields and expectations of a aggressive interest rate hike by the Federal Reserve dented the allure of non-yielding bullion.

Gold XAU = down 0.2% at $1,929.43 an ounce, as of 0933 GMT, trading in a narrow range. US GCv1 gold futures fell 0.1% to $1,932.

“The market remains torn between those investors looking to gold as a payoff for inflation, growth fears and high volatility in the bond market… versus continuing high yields,” said Ole Hansen, analyst at Saxo Bank.

“We’re seeing a new peak in real yields in the US and that really keeps the (gold) market closed somewhat in a certain range.”

10-year Treasury inflation-protected yields, or real yields, rose to a nearly two-year high on Tuesday. US / US10YTIP = RR

US 2-year Treasury yields were close to their highest level since early 2019 while 10-year yields were also higher. The dollar index = the US dollar stabilized after rising for three consecutive sessions, supported by safe haven flows on the prospects of more sanctions against Russia. American dollar/

Higher interest rates in the United States increase the opportunity cost of holding non-yielding bullion while strengthening the dollar, as the metal is priced.

Markets are looking forward to the release of the minutes of the Federal Reserve’s latest policy meeting on Wednesday for clues on whether the central bank will raise its benchmark interest rate by 50 basis points next month to curb inflation.

“The market appears to believe that the Fed will succeed in regaining control of the current ultra-high inflation by raising interest rates,” Commerzbank analyst Daniel Pressman said in a note.

“The fact that gold is consolidating despite higher real interest rates is a sign of strength.”

Spot silver XAG= rose 0.6% to $24.65 an ounce, platinum XPT fell 0.6% to $980.61 and palladium XPD rose 1.1% to $2,298.99.

(Reporting by Elaine Suring in Bengaluru; Editing by Subhranshu Sahu)

(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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