Gold prices fall as the US dollar rises

  • 27 January, 2022
  • 2:24 pm EET

Gold prices fell in trading Thursday, with the US dollar rising, after indications that the Federal Reserve will tighten monetary policy, and intend to raise interest rates starting next March.

Geopolitical concerns about an imminent war between Russia and Ukraine have limited fears amidst the demand for the yellow metal as a safe haven.

Gold prices fell by about 23 dollars at the end of trading on Wednesday, with the rise of the US currency, and the rise of stocks and US bond yields.


Gold Prices Today

The price of gold futures contracts – April delivery – decreased by 0.87%; equivalent to $ 15.90, to reach the level of $ 1816.10 an ounce.

The price of spot delivery of the yellow metal also fell by 0.3%, to record $1813.12 an ounce.

At the same time, the price of silver futures contracts – for March delivery – decreased by 2.19%, recording $23.29 an ounce.

While the spot platinum price decreased by 0.39%, to record $ 1031.88 an ounce, and the spot palladium price rose by 1.37%, to record the level of $ 2346.13 an ounce.


Interest Rates

“It’s been confirmed that the Fed is going to raise interest rates…that’s why we’re seeing a rise in Treasuries,” said Brian Lane, managing director at Goldsilver Central.

“And of course, people are selling gold…the bullion has also come under pressure because of the strong dollar,” he added, Reuters reported.

US Federal Reserve Chairman Jerome Powell took a hawkish tone on Wednesday; Announcing a rate hike in March, he said there was scope for further policy tightening without hurting employment.

US two-year Treasury yields rose to a 23-month high in early Asian trading Thursday, while 10-year yields hovered near one-week highs touched in the previous session.

Higher yields and rises in interest rates have affected gold’s attractiveness by increasing the opportunity cost of holding gold without interest.


Dollar Rise

The Dollar Index, a measure of 6 major trading currencies, rose to a level last seen on November 22.

The dollar rose amid rising US Treasury yields; This raised the US dollar index, which measures the greenback against major currencies, to 96.604 points, near its highest level in 5 weeks.

On Wednesday, the United States said it had embarked on a diplomatic track to address sweeping Russian demands in Eastern Europe; Moscow has held talks with Western countries and intensified its military build-up near Ukraine with new exercises.

“Rising geopolitical tensions have stimulated some safe-haven interest, but gold prices tend to hold in value rather than rise significantly amid such a flight to safety,” Standard Chartered analyst Suki Cooper said.




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