(Bloomberg) -- Gold declined to near the lowest in almost two weeks, as U.S. bond yields rebounded, curbing the appeal of the non-interest bearing metal.
Bullion has flipped between gains and losses each day so far this week, and fell as much as 0.8% on Thursday as 10-Year yields rose amid a debate around whether inflation is peaking. Real rates turned positive for the first time in two years this week, a sign investors believe the Federal Reserve can raise interest rates to cool inflation without severely hurting the economy.
Still, a Fed anecdotal survey showed inflationary pressures have remained strong, clouding the outlook for future growth. Gold prices are proving resilient -- gaining about 6% this year -- as haven demand stays robust with investors focusing on political and economic risk. That’s supporting purchases through gold-backed exchange-traded funds, which have seen holdings rise to the highest in more than a year, according to initial data compiled by Bloomberg.
“While higher interest rates may weigh, worries about inflation, growth, and increased market volatility, together with the war in Ukraine, remain the key reasons why asset managers continue to accumulate exposure,” said Ole Hansen, head of commodity strategy at Saxo Bank A/S.
Spot gold was down 0.7% at $1,943.71 an ounce by 1 p.m. in London. Platinum and Silver also fell, while Palladium edged higher. The Bloomberg Dollar Spot Index lost 0.2%, declining for a second day.