Investing.com – Gold prices fell sharply amid a rejuvenated dollar and rising bond yields ahead of the release of the Federal Reserve’s January meeting minutes.
Gold futures for April delivery on the Comex division of the New York Mercantile Exchange fell by $23.20, or 1.71%, to $1,333 a troy ounce.
The upcoming issuance of more than $250 billion of new US debt expected this week, pressured Treasury prices, boosting yields, sending gold prices tumbling as the dollar added to gains.
Also weighing on gold prices was the upcoming release of the Federal Reserve’s January meeting minutes due Wednesday which could signal that the central bank is leaning toward a more hawkish approach to monetary policy tightening in the wake of rising inflation and economic growth.
The Fed made a subtle change to the language in its January monetary policy statement, appearing to adopt a more upbeat outlook on the pace of inflation for 2018. RBC suggested this may have been a deliberate effort by the central bank to open the door to a more “forceful tone on rate hikes” as the year progresses.
In a rising interest rate environment, investor appetite for gold weakens as the opportunity cost of holding the precious metal increases relative to interest-bearing assets such as bonds.
The bearish start for gold comes as CFTC COT data showed money managers cut their long bets on gold for the third straight week.
In other precious metal trade, silver futures fell 1.63% to $16.44 a troy ounce, while platinum futures fell 0.59% to $1,006.30 an ounce.
Copper fell 1.89% to $3.187, while natural gas added 2.42% to $2.62. The rise in natural gas prices come as Macquarie reported Tuesday an uptick in demand ahead of a cold snap expected in March.