Gold falls as Treasury yields rise on prospects of US rate hike

Gold prices fell towards the week’s lows from the previous trading session on Wednesday, amid prospects of aggressive rate hikes by the US government US Federal Reserve sent benchmark Treasury yields to two-year highs, reducing the attractiveness of unyielding bullion.

find gold was down 0.2% to $1,810.90 an ounce (0352 GMT) after falling to a weekly low of $1,805 an ounce on Tuesday. US-Gold-Futures fell 0.1% to $1,810.80.

“We appear to be bracing for some sort of breakout, probably on the downside, as the handover occurs as inflation expectations slow, while nominal rates are shifting around expectations for central bank action, and that’s starting to really push real yields higher to drive. said DailyFX currency strategist Ilya Spivak.

Gold is considered an inflation hedge, but higher interest rates tend to weigh on the precious metal.

Benchmark US government bond yields jumped to two-year highs during the Dollar-Index posted its best one-day gain in four weeks on Tuesday, making gold expensive for holders of other currencies.

Traders await the Jan. 25-26 Fed meeting and expect a more aggressive tone in tackling unabated inflation, which at 7% is the highest in almost 40 years.

Adding to inflationary pressures, oil prices rose to a seven-year high as a pipeline failure from Iraq to Turkey increased supply concerns amid worrisome geopolitical issues in Russia and the United Arab Emirates.

“It’s very tempting to look at the geopolitical backdrop as something that people think of when they think of gold…(although) gold doesn’t seem to be behaving that way at the moment. It seems kind of ingrained in this Fed narrative,” Spivak added.

Spot silver fell 0.2% to $23.41 an ounce, platinum fell 0.8% to $973.64 and palladium fell 0.4% to $1,889.46.

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