You are here: Home » International » News » Markets
Business Standard

Gold hovers near 2-1/2-month low; investors focus on Fed rate decision

Spot gold was flat $1,863.16 per ounce by 1144 GMT, after touching its lowest since Feb 16 of $1,849.90 earlier.

Topics
Gold Prices | US Fed rate hike | Market news

Reuters 

Photo: Andrey Rudakov/Bloomberg
Photo: Andrey Rudakov/Bloomberg

Gold was flat on Tuesday, after hitting a more than two-month low, as investors braced for more aggressive rate hikes from the U.S. central bank that have boosted the dollar and Treasury yields and lifted the opportunity cost of holding gold.

Spot gold was flat $1,863.16 per ounce by 1144 GMT, after touching its lowest since Feb. 16 of $1,849.90 earlier.

U.S. gold futures were down 0.2% at $1,860.50 per ounce.

"The focus of the market is very much attached to the tightening of monetary policies by the main central banks, especially the Federal Reserve," said Ricardo Evangelista, senior analyst at ActivTrades.

"We've seen yields on the 10-year Treasury going above 3% and this is very penalizing for an asset that doesn't yield like gold."

Investors expect the Fed to raise rates by 50 basis points at the end of a two-day meeting on Wednesday, in order to rein in soaring inflation, while comments by Chairman Jerome Powell will be scanned for further signals on rate hikes.

Benchmark U.S. 10-year Treasury yields hovered close to 3%, a key psychological level, while the dollar held near 20-year highs, making greenback-priced gold less attractive for overseas buyers. [USD/] [US/]

"Spot gold pierced below support targets last seen in mid-February 2022 and looks to test subsequent levels as fundamentals look to align with bullion bears," DailyFX analyst Warren Venketas said in a note.

"The dollar remains favoured with the U.S. economy being able to withstand such aggressive tightening regardless of external factors leaving gold exposed to a lengthy drop."

While gold is perceived as an inflation hedge, higher U.S. interest rates and bond yields lift the opportunity cost of holding zero-yield bullion.

Spot silver edged up 0.3% at $22.69 per ounce, platinum firmed 1.4% to $948.30, and palladium rose 2% to $2,262.57.

(Reporting by Eileen Soreng in Bengaluru; Editing by Shinjini Ganguli and Rashmi Aich)

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

Dear Reader,


Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor

First Published: Tue, May 03 2022. 18:15 IST
RECOMMENDED FOR YOU
.