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  • Writer's pictureanalysiswatch

Title: Gold Down, Near Two-Month Low Over Stronger Dollar, Looming U.S. Rate Hike

Apr 28, 2022 01:00AM ET

By: AnalysisWatch

Gold prices slipped in Asia Thursday morning, falling to a two-month low. A stronger dollar hurt demand for the yellow metal, and an impending U.S. interest rate hike also dampened sentiment for the safe-haven asset.

Gold futures rose 0.56% to $1,878.10 an ounce by 12:57 AM ET, having earlier touched the lowest level since Feb. 24. The dollar, which usually moves inversely to gold, rose on Thursday, hitting a five-year high of 103.28. Another rise above 103.82 would take gold to levels not seen since late 2002.

Gold has held very well above $1,900, but has been under pressure from the dollar and the underlying factor that the U.S. Federal Reserve is expected to raise interest rates by 50 basis points next week, Brian Lan, managing director of GoldSilver Central, told Reuters.

Ten-year U.S. benchmark Treasury yields also rose as investors await more clarity on the "restrictive" policies the Fed plans to pursue to fight inflation. The Bank of Japan left its interest rate at -0.10% as it announced its monetary policy decision earlier in the day, while the European Central Bank also released its economic report.

With gold prices unable to rise further despite Russia's invasion of Ukraine on Feb. 24 and runaway inflation, investors likely decided to look elsewhere, Lan said, adding that lockups in China in response to recent COVID-19 outbreaks have hurt demand from major consumers.

According to the World Gold Council, global gold demand rose to its highest level in more than three years in the first quarter of 2022, driven by investors concerned about the war in Ukraine and inflationary pressures.

Among other precious metals, silver fell 0.1%, platinum slipped 0.4% to $914.17, and palladium gained 1.2%.

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