Gold falls on elevated US yields, dollar; palladium sheds nearly 8%

By Seher Dareen

(Reuters) - Gold prices fell on Monday pressured by a rise in U.S. Treasury yields and the dollar, while autocatalyst palladium tumbled nearly 8% after supply concerns eased ahead of peace talks between Russia and Ukraine.

 

Spot gold XAU= fell 1.08% to $1,936.30 per ounce by 10:56 a.m. ET (1456 GMT), U.S. gold futures GCv1 declined 0.8% to

 

$1,939.10.

Benchmark 10-year bond yields hit their highest since April 2019, on bets of aggressive interest rate hikes by the Federal Reserve to fight soaring inflation. US/ (Full Story)

 

Although gold is considered an inflation hedge, rising U.S. interest rates increase the opportunity cost of holding non-yielding bullion. USD/

 

However, Jim Wycoff, senior analyst at Kitco Metals, said that he does not see a "serious downside price pressure for any of the (metal) markets in the near term because of inflation worries".

 

"Anytime we have inflationary pressures like we're seeing now, history shows that the metals markets have been sought after and I suspect that's going to continue to be the case."

 

Making bullion more expensive for holders of other currencies, the dollar .DXY rose 0.5%.

 

Gold's safe-haven appeal was also pressured by hopes of progress in the first face-to-face peace talks in more than two weeks between Ukraine and Russia. (Full Story)

 

"We've seen a large part of the war premium in gold already taken out, but maybe there's a little further to go. So, gold is currently facing significant headwinds," independent analyst Ross Norman said.

 

Palladium XPD= was down 3.5% at $2,254.35 per ounce, after falling to its lowest level since Jan. 25. The metal has lost nearly 34% since scaling a record high on March 7.

 

"On palladium, despite the airspace closure between Russia and the U.S. and Europe, alternate routes allow Russia still to export palladium. So I guess some supply disruption concerns are vanishing," UBS analyst Giovanni Staunovo said.

 

Platinum XPT= shed 1.6% to $985.65, while silver XAG= fell 1.9% to $25.03.

 

(Reporting by Brijesh Patel and Seher Dareen in Bengaluru; Editing by Amy Caren Daniel)