Gold set for second weekly loss on rising yields as rate hikes loom

Gold prices eased on Friday and were on track for a second straight weekly drop, as prospects of higher interest rates and rising bond yields challenged bullion’s safe-haven appeal.

Spot gold fell 0.2 per cent to $1,624.65 per ounce by 1050 GMT. Bullion prices have shed 1 per cent so far this week.

U.S. gold futures dropped 0.5 per cent to $1,629.10.

Benchmark 10-year Treasury yields scaled a fresh peak since June 2008, while the dollar index gained, making gold a less favoured bet for investors.

“Gold continues to be driven by the ebb and flow in yields as well as the strength of the U.S. dollar,” said Michael Hewson, chief market analyst at CMC Markets UK.

“While yields continue to edge higher, the direction of travel for gold is likely to remain towards the downside and a break of the September lows towards $1,600.”

Aggressive monetary policy tightening by the U.S. Federal Reserve, as well as other central banks, has seen gold shed more than 11 per cent  so far this year as the metal’s lack of yield makes other interest-bearing assets far more attractive.

Gold has also “failed to react to the chaos in Westminster with the markets viewing the end of Liz Truss’ disastrous tenure as positive for equities, removing any possible rush to haven assets benefiting gold,” said Rupert Rowling, an analyst at Kinesis Money.

The Fed’s aggressive stance remains the major driving factor, overriding others including the Ukraine war, Rowling added.

Adding to the recent hawkish rhetoric, Philadelphia Fed President Patrick Harker on Thursday said the U.S. central bank was “going to keep raising rates for a while.”

Elsewhere, spot silver fell 1.8 per cent to $18.33 per ounce, platinum slipped 1.2 per cent to $903.50, and palladium dropped 2.3 per cent to $2,011.07. All three metals were set for weekly gains. – Reuters

Show More
Back to top button