Gold bullion extends decline on dollar rally

GOLD PRICES extended their retreat to fall more than 1% on Monday as the dollar hovered near two-decade high, dimming the metal’s appeal.

Spot gold was down 1.4% at $1,856.26 per ounce by 2 p.m. EDT (1800 GMT). US gold futures settled down 1.3% at $1,858.60.

“The dollar has exploded higher given expectations of a more aggressive US Federal Reserve, in turn weighing on gold, which bears no interest,” said David Meger, director of metals trading at High Ridge Futures.

Making bullion more expensive for overseas buyers, the dollar, also considered a rival safehaven hovered near a two-decade high. Meanwhile, benchmark 10-year US Treasury yield eased after hitting fresh 3-1/2-year high earlier in the session.

Two of the Fed’s policy hawks on Friday pushed back on the view the US central bank missed the boat on the fight against stubborn inflation, citing tightening financial conditions that began well before it began raising interest rates in March.

While gold is considered a hedge against inflation and economic uncertainties, rapid US interest rate hikes increase the opportunity cost of holding the non-yielding bullion.

Spot palladium rose 1.6% to $2,079.08 per ounce, after shedding as much as 8% on Friday amid concerns over automobile demand due to coronavirus disease 2019 (COVID-19) curbs in China.

But prices of palladium, used in vehicle exhausts to reduce emissions, could come under pressure due to a likely market surplus with global light vehicle production forecasts for 2022 being downgraded amid the chip shortage and China’s curbs, Heraeus Precious Metals said in a note.

Platinum shed 1.1% to $952.06 and silver fell 2.5% to $21.78. —