Title: Gold Down, But Range Tight as Strong Dollar Offsets Ukraine Safe-Haven Demand

Apr 08, 2022 01:20AM ET

By: AnalysisWatch

Gold prices were lower in Asia Friday morning, but traded within a narrow range. The dollar strengthened as the U.S. Federal Reserve plans to tighten monetary policy faster than expected, partially offsetting safe-haven demand due to the ongoing war in Ukraine.

Gold futures fell 0.46% to $1,928.9 by 9:35 PM ET.

The dollar, which typically moves inversely to gold, rose to a near two-year high on Friday and was also on track for its best week in a month. The yield on 10-year U.S.

Treasury bonds also hit a three-year high in the previous session.

Aggressive tones from the Federal Reserve in the minutes of its last meeting also boosted the dollar. St. Louis Fed President James Bullard added on Thursday that he favored raising the federal funds rate to 3% to 3.25% in the second half of 2022. On the other hand, Chicago Fed President Charles Evans and his Atlanta counterpart, Raphael Bostic, favored a neutral rate hike while continuing to monitor the economy.

In the Asia-Pacific region, India's central bank left its interest rate at 4% when it announced its policy decision later in the day.

However, gold prices are supported by the Ukraine war, rapid inflation and the COVID-19 pandemic. However, the Fed's aggressive stance on fighting inflation, recovering bond yields, a stronger dollar and easing pandemic restrictions on higher vaccination rates will contain gold prices, Fitch Solutions said in a note.

In the bleakest assessment since its Feb. 24 invasion of Ukraine, Russia described the "tragedy" of mounting troop losses and the economic impact of sanctions. Meanwhile, Ukrainians evacuated cities in the east of the country ahead of an expected major offensive.

In other precious metals, silver fell slightly by 0.1%, platinum declined by 0.2%, and palladium rose by 1.4%. Both platinum and palladium recorded five consecutive weekly losses.