Title: Gold Down, Weighed Down by Aggressive Fed
May 19, 2022 01:41AM ET
Gold was weaker in Asia Thursday morning, with a steady dollar and increased Treasury yields weighing on the greenback-rated metal, whose outlook was already clouded by the Federal Reserve's aggressive stance on inflation.
Gold futures were down 0.20% at $1,812.34 an ounce by 1:31 AM ET. The dollar, which usually moves inversely to gold prices, eased slightly on Thursday.
Gold's daily close is effectively at the trend line from its March 2020 low, and the short-term swings on either side of that key trend line were not convincing enough to trigger a sustained move, City Index senior market analyst Matt Simpson told Reuters.
In recent weeks, the yellow metal appeared to closely track daily fluctuations in the US dollar and 10-year Treasury bond yields. The dollar's near 20-year highs pushed gold to its lowest level in more than three months on Monday.
Gold's performance and outlook were also hurt by the U.S. Federal Reserve's taking a more hawkish monetary policy stance on rate hikes.
Fed Chairman Jerome Powell said Tuesday that the U.S. central bank will raise interest rates as needed to curb inflation, which he said threatens the foundation of the economy.
"Inflows in exchange-traded funds (ETFs) peaked on April 27, and since then there has been a net outflow as investors have lost confidence in the yellow metal... and the slide in equity markets has been just another reason for some investors to convert their gold into cash," Simpson said.
In the Asia-Pacific region, Japanese trade data for April 2022 showed exports rose 12.5% year-on-year and imports rose 28.2%. The trade balance shrank to -839.2 billion (-6.51 billion).
In other precious metals, silver rose slightly by 0.1%, while platinum fell by 0.9% and palladium by 0.6%.