Gold prices fall as US bond yields rise

  • 18 January, 2022
  • 12:37 pm EET

Gold prices fell on Tuesday, affected by higher US Treasury yields, as investors looked for clues on the timetable for a US Federal Reserve interest rate hike from next week’s policy meeting.


Gold Prices Today

The price of gold futures contracts for February delivery decreased by 0.03%, to reach the level of $ 1815.90 an ounce.

The price of spot delivery of the yellow metal also decreased by 0.2%, to record $1810.61 an ounce.

At the same time, the price of silver futures contracts – for March delivery – increased by 0.4%, recording $22.81 an ounce.

The spot platinum price decreased by 0.69%, recording $964.94 an ounce, while the spot palladium price rose by 0.13%, to record $1878.73 an ounce.


US Fed Moves

Global investor interest remains steady at the US Federal Reserve’s January 25-26 meeting after US bank officials indicated they will begin raising interest rates in March to tame inflation, which rose 7% last month from a year ago. The former — the fastest pace in nearly 40 years.

Gold is an inflationary hedge, but the metal is highly sensitive to higher US interest rates, which increases the opportunity cost of holding the non-interest bearing yellow metal.


US Bonds

Yields on the benchmark 10-year US Treasury rose to a two-year high, reducing the allure of the non-yielding metal.

The fate of gold in the near term lies in the hands of the Federal Reserve and how quickly it raises rates over the next half year, said Stephen Innes, managing partner at SBI Asset Management.

He added that the yellow metal is likely to remain range bound and may turn negative, Reuters reported.


Geopolitical Risks

“Every day we are trying to see how a hawkish Federal Reserve is for other geopolitical risks engulfing the market, such as the situation in Ukraine, which are still keeping the gold price on display at the moment,” Ennes said.

The United States said last week that it feared Russia would prepare a pretext to invade Ukraine if diplomacy failed to achieve its goals.

The Bank of Japan raised its inflation forecast for the fiscal year beginning in April, and said risks to the price outlook are equally balanced.




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