Title: Gold Up, But Near Three-Week Low as Fed Rate Hike boosts Treasury Yields

Mar 17, 2022 01:20AM ET

By: AnalysisWatch

Gold prices rose in Asia on Thursday morning, but remained near a three-week low reached in the previous session as the US Federal Reserve's rate hike pushed up US government bond yields. Hopes for progress in ceasefire talks between Russia and Ukraine also dimmed the yellow metal's appeal as a safe haven.

At 1:15 p.m. ET, gold futures were up 1.31 percent to $1,934.30 after falling to $1,894.70 on Wednesday, the lowest level since Feb. 28.

The US Federal Reserve raised its benchmark interest rate to 0.5% in its decision on Wednesday. It was the first time the central bank raised rates since 2018, and hikes at all six remaining meetings in 2022 are likely. Fed Chairman Jerome Powell said the US economy was "very strong" and could withstand a tightening of monetary policy. The Fed's decision also sent US 10-year government bond yields to their highest level since May 2019.

On the other side of the Atlantic, the Bank of England will announce its monetary policy decisions later today. European central bankers are meeting on the same day. At the conference, Central Bank President Christine Lagarde, Executive Board member Isabel Schnabel, ECB Governing Council member Ignazio Visco, and Chief Economist Philip Lane will also speak.

In the Asia-Pacific region, the Bank of Japan will announce its monetary policy decision on Friday.

Investors are also watching the peace talks between Russia and Ukraine as a possible solution to the conflict that began with the Russian invasion on February 24th. Ukrainian President Volodymyr Zelensky said the negotiations were becoming "more realistic," while Russia said the proposals under discussion were "close to an agreement".

Silver rose 0.3% and platinum 0.7%.