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Gold slips as hawkish Fed policy outlook takes centre stage

Published 04/05/2022, 03:48 AM
Updated 04/05/2022, 02:31 PM
© Reuters. FILE PHOTO: Marked ingots of 99.99 percent pure gold are placed in a cart at the Krastsvetmet non-ferrous metals plant in the Siberian city of Krasnoyarsk, Russia March 10, 2022. REUTERS/Alexander Manzyuk/

By Seher Dareen

(Reuters) - Gold fell on Tuesday as rising U.S. Treasury yields and expectations for more aggressive monetary policy tightening by the Federal Reserve offset safe-haven demand for bullion spurred by possible new Western sanctions on Russia.

Spot gold XAU= was down 0.6% at $1,921.47 per ounce by 2:16 p.m. EDT (1816 GMT). U.S. gold futures GCv1 settled down 0.3% at 1,927.50.

Benchmark 10-year Treasury yields rose after Fed Governor Lael Brainard said she expects methodical rate hikes and rapid reductions to the central bank's balance sheet to bring U.S. monetary policy to a "more neutral position" later this year. (Full Story)

Expectations for the Fed to be a bit more aggressive in fighting inflationary pressures are weighing on gold, considering "she's (Brainard) generally considered to be one of the more dovish members of the Fed," said David Meger, director of metals trading at High Ridge Futures.

Rising U.S. interest rates increase the opportunity cost of holding non-yielding gold.

The dollar .DXY also advanced, curbing overseas buyers' appetite for gold. USD/

"Geopolitical risks will likely be the primary short-term driver and that would help gold widen that trading range ($1,900-$1,950), where you could see prices possibly even going to $1,975," said Edward Moya, senior market analyst at OANDA.

But price action may also be influenced by the release on Wednesday of the minutes from the Fed's last policy meeting, which will be scanned for clues on the trajectory of rate hikes, Moya added

Wall Street indexes fell after Brainard's comments, which spooked investors who were already on edge over the prospect of fresh sanctions on Russia. .N MKTS/GLOB (Full Story)

Spot silver XAG= fell 0.8% to $24.30 per ounce, platinum XPT= fell 1.9% to $968.09 and palladium XPD= fell 1.8% to

$2,234.57.

© Reuters. FILE PHOTO: Marked ingots of 99.99 percent pure gold are placed in a cart at the Krastsvetmet non-ferrous metals plant in the Siberian city of Krasnoyarsk, Russia March 10, 2022. REUTERS/Alexander Manzyuk/

Standard Charted lowered its 2022 palladium forecast to $2,270 an ounce from $2,763.

While supply concerns and possible disruptions in South Africa could keep the palladium market on edge in the near term, demand losses may eventually weigh on the market later this year, Standard Charted said in a note.

Latest comments

this some drama for 3 weeks consolidation so called expert here inflation peace talk.......dnt predict if dnt know anything lol.........
Russian gold 🤣
Gold has a history of going higher as interest rates rise.  People that understand it the other way around are misunderstanding.  Fifty years of data show gold follows the interest rate, none more dramatic than the last twenty years.
Ukraine risks or inflation risks...
At this lower price, it's high time to buy gold or gold stocks.
buy lol then gold will down to 1900
Gold is also a hedge against political uncertainties right? So if Zelensky just stated that ther might be no meeting between him and putin, the war could take a nasty turn which should technically be good for gold...or not?? just here to learn and understand...feel free to comment
Exactly.
USD safe haven? Lol maybe if rates go to 10%
last time inflation was this high, interest rates rose by more than 10% in order to stop inflation from rising
 yeah and the dollar crashed
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