Gold prices fell in trading on Tuesday, affected by the rise in the dollar and the yield of US bonds.
This comes as investors assess the likely response of central banks to rising inflation pressures ahead of major policy meetings scheduled for this week.
Gold prices rose by more than $10, at the close of trading on Monday, to a 6-week high, as US Treasury yields declined.
Gold Prices Today
By 08:39 AM GMT (11:39 AM GMT), the price of gold futures – for December delivery – decreased by 0.16%, to record $ 1804 an ounce.
The spot price for the yellow metal also decreased by 0.33%, recording $1801.71 an ounce.
The decline in gold came with the dollar gaining 0.1% on Tuesday, recovering from a nearly one-month low hit in the previous session, reducing gold’s safe-haven appeal for holders of other currencies.
The benchmark 10-year US Treasury yield also rose slightly at 1.6431%, raising the opportunity cost of interest-free gold.
“Gold should remain relatively supportive in the current inflationary environment, until we get a hawkish pivot from the Fed,” said Stephen Innes, managing partner at SBS Asset Management.
“But if inflation gets out of control, the Fed may raise interest rates faster than priced, and that should calm sentiment in the gold market,” Innes added.
He noted that the Fed also had to contend with concerns about weak growth, which had made them reluctant to tighten too hard.
Investors shifted their focus to the BoJ and European Central Bank policy meetings scheduled for Thursday, followed by the US Federal Reserve meeting next week, and the Bank of England policy meeting.
Bank of England interest rate setter Silvana Tineiro said she needs more time to judge how the end of the government’s job-creating holiday scheme will affect the labor market, adding to evidence that she does not see an urgent need to raise interest rates.
Gold is often considered an inflation hedge, even though lower stimulus and higher interest rates push government bond yields higher, increasing the opportunity cost of non-interest bearing bullion.
On the technical front, gold may test resistance at $1,814 an ounce, and a break above there could lead to gains at $1,826, according to Reuters technical analyst Wang Tao.
At the same time, the price of silver futures contracts – for December delivery – decreased by 0.84%, to reach $24.39 an ounce.
The spot platinum price also decreased by 1.13%, recording $ 1050.42 an ounce, and the spot palladium price decreased by 0.63%, to reach $ 2042.99 an ounce.