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  • Writer's pictureanalysiswatch

Title: Gold slips as rising Treasury yields bolster dollar

Apr 11, 2022 01:35AM ET

By: AnalysisWatch

Gold prices fell in range-bound trading on Monday as rising government bond yields supported the dollar and countered fresh concerns about the war in Ukraine, while palladium extended gains boosted by London's decision to block trade in the metal from Russia.

At 12:52 PM ET, spot gold was down 0.2% at $1,941.95 an ounce after hitting a more than one-week high of $1,949.32 earlier in the day. U.S. gold futures contracts were unchanged at $1,945.70.

"Gold is still trading sideways, reflecting the conflicting currents we are seeing." "There are still real concerns about the geopolitical outlook and the potential escalation in Ukraine," said Michael McCarthy, director of strategy at Australia's Tiger Brokers.

The U.S. dollar index rose after breaching the 100 mark for the first time in almost two years on Friday, buoyed by the prospect of aggressive interest rate hikes by the U.S. Federal Reserve to curb soaring inflation.

A stronger dollar reduces the attractiveness of gold to holders of other currencies.

The benchmark 10-year yield added another seven basis points to reach a more than three-year high of 2.77% as the Fed prepares to reduce asset holdings and raise interest rates sharply.

Higher U.S. interest rates and yields raise the opportunity cost of holding securities, which are also used as a hedge against rising inflation.

Russian forces shelled targets in eastern Ukraine with rockets and artillery on Sunday, giving the safe-haven metal some support.

Palladium rose 2.6% to $2,487.83 after hitting a two-week high earlier in the session.

The metal for autocatalysts gained 8.6% on Friday after trading in newly refined Russian platinum and palladium was suspended in London, the biggest metals trading hub.

Spot silver lost 0.2% to $24.69 an ounce and platinum rose 0.5% to $979.97.

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