Apr 25, 2022 02:15AM ET
By: AnalysisWatch
Gold prices fell to a four-week low on Monday after bets on an increasingly aggressive and hawkish approach to monetary tightening by the US Federal Reserve strengthened the dollar and put pressure on demand for precious metals.
Spot gold was 0.7 percent lower at $1,916.41 an ounce at 0545 GMT, having earlier touched $1,914.58 an ounce, the lowest level since March 29. US gold futures were 0.9 percent lower at $1,917.40 an ounce.
Although yields on 10-year US Treasury bonds are approaching 3 percent and this should theoretically be a turning point for gold, these are more real yields that are starting to catch up and that will weigh on gold, said Stephen Innes, managing partner at SPI Asset Management. [US/]
With expectations of a half-percentage point rate hike at the Fed meeting in May firm, traders on Friday jumped on bets that the US central bank will go further in the coming months.
Gold is highly sensitive to raising US short rates and higher yields, increasing the opportunity cost of holding gold without yield. However, it is considered a safe store of value in times of economic and political crisis.
The dollar rose to its highest level in two years, making gold more expensive for holders of other currencies. [USD/]
According to Reuter’s technical analyst Wang Tao, the gold price could test support at $1,915 an ounce, with a high probability of a break below that level and a fall towards $1,889.
Silver fell 1.7 percent to a two-month low of $23.73 an ounce and palladium fell 3.1 percent to $2,302.19.
Platinum fell 0.8 percent to $923.00 an ounce, the lowest level since mid-December last year.