Gold prices edged higher on Tuesday as a
decline in U.S. Treasury yields countered pressure on
greenback-priced bullion from sustained strength in the dollar.
Spot gold was up 0.2% at $1,856.75 per ounce, as of
0213 GMT. U.S. gold futures were down 0.3% at $1,853.90.
Benchmark 10-year U.S. Treasury yields extended their
decline on Tuesday after pulling back from the highest level in
3-1/2 years in the previous session, lifting prices of
zero-yield gold for now.
“Not only do we have a clear downtrend in gold prices at the
moment, the drivers are pretty straightforward as the potential
for higher rates and a stronger U.S. dollar have overwhelmed any
safe-haven appeal of gold,” said Michael McCarthy, chief
strategy officer at Tiger Brokers, Australia.
While gold is seen as a safe store of value during times of
political and economic crises, it is highly sensitive to rising
short-term U.S. interest rates, which raise the opportunity cost
of holding bullion.
The dollar index was steady, having risen overnight
to a fresh 20-year peak. It later lost some ground after Atlanta
Fed President Raphael Bostic hosed down talks of a 75-basis
points at the U.S. Federal Reserve’s next meeting.
This made greenback-priced and rival safe-haven bullion less
attractive for other currency holders, and continued to restrain
gold prices after pushing them 1% lower in the previous session.
Last week, the U.S. central bank raised its benchmark
overnight interest rate by a widely expected half-a-percentage
point, the biggest hike in 22 years, as it works to tighten
pandemic-era monetary policy.
“We’re sitting on very important support right now … a
break through $1,850 (for gold) could from a technical point of
view introduce significant downside risks in the short-term,”
Spot silver gained 0.4% to $21.87 per ounce, while
platinum dipped 0.1% to $954.98, and palladium
rose 0.5% to $2,107.80.
(Reporting by Bharat Govind Gautam in Bengaluru; Editing by