Oct 20, 2022 03:50AM ET
By:AnalysisWatch
Gold prices stalled near a three-week low on Thursday as rising U.S. Treasury yields and fears of more rate hikes by the Federal Reserve dented investors' appetite for the metal.
Spot gold was steady at $1,627.98 per ounce at 0709 GMT. Prices had hit their lowest since Sept. 28, at $1,621.20.
U.S. gold futures were down 0.1% at $1,632.70.
The dollar index fell 0.1%, relieving some of the pressure on gold with prices in the green. Meanwhile, 10-year Treasury yields have remained near their highest since mid-2008. [USD/]
"Gold remains vulnerable as the inflation and interest rate environment is far from favorable," said Craig Erlam, market analyst at OANDA, adding that the metal had found some temporary support around $1,620.
"The recent trend is very contrarian." A test of $1,600 may be in sight.
Although gold is often seen as a hedge against inflation and economic turbulence, rising U.S. interest rates have increased the opportunity cost of holding the zero-yield metal, which has fallen nearly 11% so far this year.
The Federal Reserve's "Beige Book" survey showed that U.S. economic activity expanded modestly in recent weeks, although it remained flat in some regions and declined in a couple of others, while businesses noted that price pressures remained elevated.
The report did little to temper expectations for a fourth consecutive Fed rate hike of 75 basis points in November.
Gold could consolidate above the $1,600 level, with the next turning point being the U.S. core personal consumption expenditure data due next week, according to Ilya Spivak, currency strategist at DailyFX.
As a sign of sentiment, holdings of the SPDR Gold Trust (P:GLD), the world's largest gold-backed exchange-traded fund, fell 6.08 tonnes on Wednesday in its biggest one-day outflow since July 6.
Spot silver was down 0.2% at $18.40 an ounce, platinum was up 0.1% at $884.75 and palladium was down 0.4% at $1,992.88.