Gold calmed as expectations of an interest rate hike in the United States eased



Gold prices were caught in a narrow range on Friday between expectations of sharp increases in US interest rates and worries about rising inflation and the economic fallout from the Ukraine crisis.


Spot gold settled at $1,931.53 an ounce by 0858 GMT but was up 0.4% during the week. US gold futures fell 0.2 percent to $1,933.80.

“On the one hand, we have geopolitical risks born from the war in Ukraine and high inflation that is providing support for precious metals…and on the other hand we have an increasingly tough stance from the Federal Reserve,” said Ricardo Evangelista, Senior Analyst at ActivTrades.


“Until one of these factors gains clear dominance over the other, gold prices are likely to remain within the current range.”


Earlier today, the dollar index hit its highest level since May 2020, buoyed by the minutes of the March Federal Reserve policy meeting that showed “several” policy makers willing to raise interest rates in half-percentage point increases in upcoming meetings to curb inflation. [USD/]


The benchmark 10-year US Treasury yield touched a three-year high. [US/]


Gold is very sensitive to rising interest rates and US Treasury yields, which increases the opportunity cost of holding non-yielding bullion, while boosting the US currency in which it is priced.


Meanwhile, Russia gave its most grim assessment yet of its invasion of Ukraine, describing the “tragedy” of mounting troop losses and the economic blow from Western sanctions.


“The opposing forces of inflation and price increases are likely to have the strongest impacts on gold in the second quarter,” the World Gold Council said in a report.


The economic recovery after the coronavirus and supply-side turmoil, exacerbated by the Russo-Ukrainian war, is likely to keep inflation higher for longer.


Spot silver rose 0.4% to $24.66 an ounce.


Palladium rose 1.2 percent to $2,260.41 an ounce, and platinum fell 0.1 percent to $961.67. Both metals are set for their fifth consecutive weekly loss.




(Reporting by Asha Cestla in Bengaluru; Editing by Sherry Jacob Phillips and Robert Persell)

(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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