Gold prices are down more than 1% today as the allure of the non-yielding precious metal was hurt by a jump in US Treasury yields, and the dollar climbed to a two-decade high.
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Spot gold fell 1.52% to $1,854.30 an ounce
Gold prices fell more than 1% on Monday, as the allure of the non-yielding precious metal was hurt by a jump in US Treasury yields and the dollar’s rise to a two-decade high.
And gold fell in spot transactions 1.52% to $ 1854.30 an ounce by 18:50 GMT. US gold futures fell 1.5 percent to $1,854.50.
Supported by expectations of active monetary policy tightening from the US Federal Reserve, benchmark 10-year Treasury yields rose to the highest level since November 2018 and the dollar hovered near its highest level since 2002. This makes gold more expensive for holders of other currencies.
“Most of the gold’s suffering is caused by the strength of the US dollar,” said Carlo Albertodi Casa, foreign markets expert at Kinesis, adding that a drop below the key $1,850 support would be a negative sign.
Gold is considered a safe store of value in times of political and economic crisis, but it is highly sensitive to increases in US interest rates and bond yields that raise the opportunity cost of holding the yellow metal.
But a research note by researchers at ANZ Bank argues that concerns about slowing global economic growth due to rapidly rising inflation and growing political risks should protect gold prices to some extent.
Among other precious metals, spot silver fell 2.5% to $21.78 an ounce, platinum fell 1% to $953.50, while palladium rose 2.7% to $2102.60.