Gold’s surge halted by rising US bond yields

GOLD fell on Tuesday as a rise in Treasury yields took the shine off bullion’s recent rise that was driven by the US banking crisis, while an uptick in US inflation in February raised more questions than answers on interest rates.

Spot gold fell 0.2% to $1,909.55 per ounce by 2:18 p.m. EDT (1818 GMT). US gold futures dropped 0.3% to settle at $1,910.90.

Higher benchmark US 10-year Treasury yields weigh on zeroyielding gold’s appeal.

Gold showed little reaction to US consumer price index data, which showed a 0.4% rise on a monthly basis in February, as expected, after accelerating 0.5% in January.

“There is nothing in the print to scare off gold bulls who’re searching for financial instability hedges at a time where the Fed may (indirectly) accept that inflation will stay higher for longer,” said Nicky Shiels, head of metals strategy at MKS PAMP SA.

Traders are now largely expecting only a 25-basis-point interest rate hike by the US central bank this month.

Considered a hedge against economic uncertainties, gold becomes a more attractive bet in a low interest-rate environment.

Bullion prices rallied more than 2% in the previous two sessions as investors sought cover after the collapse of US lender Silicon Valley Bank (SVB) spooked the market.

“As long as the contagion risks stemming from the ongoing SVB saga remain, potentially ramping up recession risks along the way, safe-haven assets are set to remain well bid in the interim,” said Han Tan, chief market analyst at Exinity.

Spot silver rose 0.6% to $21.94 per ounce and platinum lost 1% to $986.17, while palladium rose 1.2% to $1,490.43. —