Gold prices rise amid expectations of a rate hike in America

  • 04 January, 2022
  • 6:00 pm EET

Gold prices rose in trading on Tuesday, to recover from the worst selling in the yellow metal in 6 weeks, driven by bets that the Federal Reserve will raise interest rates earlier than expected.

The rise in the yellow metal prices came after a significant rise in US bond yields, which led to the worst bullion sell-off in 6 weeks, the previous session.

Gold prices fell by more than 28 dollars, at the end of trading on Monday, the first session of 2022, with a strong rise in the US dollar.


Gold Prices Today

The price of gold futures contracts for February delivery increased by 0.21%, to reach the level of $1803.90 an ounce.

The spot price of the yellow metal also rose by 0.08%, recording $1,802.89 an ounce.

At the same time, the price of silver futures contracts – for March delivery – increased by 0.01%, recording $22.82 an ounce.

The spot platinum price fell by 0.28%, to record $956.60 an ounce, and the spot palladium price rose about 1.76% of its value, to record $1859.51 an ounce.


Gold Market Situation

“When you have that kind of rise in yields, it undermines the attractiveness of an inflation hedge… It wasn’t really surprising to see gold starting to pull back,” said Ilya Spivak, currency strategist at DailyForex.

He noted that towards the end of 2021, interest rate expectations were rising, but inflation fears were piling up faster, so real interest rates remained steady, giving gold some appeal as a store of inflation-adjusted value.

For his part, chief market analyst , Jeffrey Haley, said that prices were helped early Tuesday, by some investors who covered short positions.

He added that gold is likely to see resistance at $1,830 and $1,840 an ounce, although it would be a big surprise if those levels are seen this week, Reuters reported.


US Bonds

Yields on the benchmark 10-year Treasury rose to a 6-week high on Monday, with investors expecting the Federal Reserve to raise interest rates in March, shortly after completing bond purchases.

Higher returns usually increase the opportunity cost of owning gold without interest.

Although the Omicron MERS-CoV mutant is much more contagious than previous iterations, the data suggests that it may be less virulent than Delta, which has led to various countries taking drastic precautions.

On Monday, the US Food and Drug Administration authorized the use of the third dose of the Pfizer vaccine for children aged 12 to 15 years.



Reliable Trading since 2012