Gold bullion erases losses as US Treasury yields retreat

GOLD reversed course to rise on Wednesday as a slide in US Treasury yields helped offset pressure from a firmer dollar and the Federal Reserve’s plans for aggressive interest rate hikes.

Spot gold rose 0.1% to $1,816.49 per ounce by 2:10 p.m. ET (1810 GMT). US gold futures settled down 0.2% at $1,815.9.

Treasury yields slid in choppy trading, tracking losses on Wall Street, after poor US housing data added to growing concerns of an economic slowdown.

“Another round of weakness in the equity markets in combination with falling yields and safe-haven bids are driving gold prices higher,” said David Meger, director of metals trading at High Ridge Futures.

Fed Chair Jerome Powell on Tuesday pledged that the US central bank would ratchet up interest rates as high as needed to kill a surge in inflation.

Although gold is considered a hedge against inflation, rising interest rates dull interest in nonyielding bullion.

Limiting gold’s advance, rival safe-haven dollar rebounded after posting its biggest single-day drop in more than two months.

Rupert Rowling, market analyst at Kinesis Money, said in a note that while gold improved slightly this week, bouncing back above $1,800, “as long as inflation remains a primary concern for the major economies, gold is likely to find it difficult to make significant gains with the specter of rising interest rates severely denting the metal’s appeal”.

Reflecting overall sentiment, inflows into the SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, continued to decline.

Spot silver fell 0.9% to $21.42 per ounce, platinum fell 1.6% to $935.49 and palladium fell 3.1% to $1,990.06. —