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

Gold prices fall as yields gain in run up to Fed rate hike decision

Benchmark US 10-year Treasury yields firmed after backing off the key 3% mark in the previous session

Gold Prices | Gold trade | Federal Reserve


Photo: Andrey Rudakov/Bloomberg

By Bharat Gautam

(Reuters) - fell on Wednesday, as higher U.S. Treasury yields and a looming interest rate hike announcement by the dented demand for zero-yield bullion.

Spot gold was down 0.3% at $1,862.48 per ounce, as of 0217 GMT. U.S. gold futures fell 0.4% to $1,82.40.

Benchmark U.S. 10-year Treasury yields firmed after backing off the key 3% mark in the previous session, ahead of a widely expected big interest rate hike from the Fed as it attempts to contain soaring U.S. inflation.

While gold is seen as an inflation hedge, higher short-term U.S. interest rates and bond yields tend to increase the opportunity cost of holding non-yield bullion.

The U.S. central bank's Federal Open Market Committee is set to release a policy statement at 1800 GMT, followed by Fed Chair Jerome Powell's news conference.

Market expects a decision on raising the benchmark overnight interest rates and details on reducing the Fed's $8.9 trillion balance sheet.

"A 50 basis point hike is now priced in by ... If the statement has a still more hawkish bias, then gold is likely to come under pressure once again," said OANDA senior analyst Jeffrey Halley.

"If the statement remains mostly unchanged in its guidance, then a short-term recovery to $1,880 is possible as the U.S. dollar is likely to fall."

The dollar remained close to 20-year peaks, making greenback-priced gold less attractive for overseas buyers.

Russian forces pounded targets in eastern Ukraine on Tuesday, even as the European Union prepared to slap oil sanctions on Moscow.

Bullion is seen as a safe store of value during times of economic and political crises.

Spot silver dipped 0.1% to $22.54 per ounce, while platinum was nearly unchanged at $961.62, and palladium gained 0.2% to $2,260.28.


(Reporting by Bharat Govind Gautam in Bengaluru; editing by Uttaresh.V and Vinay Dwivedi)

(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: Wed, May 04 2022. 09:36 IST