Gold prices fall as US bond yields rise

  • 11 March, 2022
  • 12:42 pm EET

Gold prices fell on Friday, with US Treasury yields rising overnight, on the back of rising inflation data.

Despite the decline, the precious metal is heading for a second consecutive weekly gain, supported by growing fears of political tensions, as talks between Russia and Ukraine have made no progress.

And gold prices ended their trading, yesterday, Thursday, with a rise of more than 12 dollars, to rise above 2000 dollars an ounce, after the release of inflation data.


Gold Prices Today

The price of gold futures contracts – April delivery – decreased by 0.17%, to reach the level of 1997.10 dollars an ounce.

The price of spot delivery of the yellow metal also decreased by 0.23%, to reach $1992.48 an ounce.

At the same time, the price of silver futures – May delivery – decreased by 0.23%, at $25.79 an ounce.

The spot platinum price also declined by 0.28% at $1067.24 an ounce, while the spot palladium price rose 0.56%, at $2945.56 an ounce.

Palladium, which carmakers use in catalytic converters to reduce emissions, hit a record $3,440.76 on Monday, driven by concerns about supply disruptions from its largest producer Russia.


Gold Market Forecast

“Gold trade will largely be driven again by war,” said Stephen Innes, managing partner at SBI Asset Management. The market has it right now.”

Yields on benchmark 10-year Treasury bonds rose on Thursday, after US inflation data saw its biggest increase in 40 years, cementing expectations that the US Federal Reserve will raise interest rates next week, while the European Central Bank took a hawkish turn.

Gold is very sensitive to rising US interest rates, which increases the opportunity cost of holding non-yielding bullion.


Ukrainian Crisis

Investors rushed to safe-haven assets during the Ukrainian crisis that drove up gold prices, which have jumped as much as 8.5% in the past two weeks, bringing them closer to record levels hit in August 2020.

Technical Analyst Wang Tao believes that spot gold may retest the support level at $1976 an ounce, and a breakout could cause a drop to the $1,924-$1953 range.


Inflation Fears

“With Russia being a major commodity producer, sanctions increase the risks of stagflation,” ANZ analysts said in a note.

They added, “We believe that increased geopolitical risks and higher inflation will support gold prices,” .

The sharp rise in the prices of oil and other commodities has raised concerns about another jolt in the high rate of inflation and the possibility of slowing economic growth.

Today, US data showed that the inflation rate in the United States rose to 7.9% during the 12 months ending in February, to reach the highest level in 40 years.




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