Gold Stable as Higher Bond Yields and US Dollar Counteract Uncertainty in Ukraine

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Gold bars lie in a vault at the Perth Mint refinery in Perth, Australia, August 9, 2018.

Carla Gottgens | Bloomberg | Getty Images

Gold held steady on Thursday after a sharp decline in the last session as safe-haven demand driven by concerns over Ukraine countered gains in the US dollar and Treasury yields as the Federal Reserve signaled interest rate hikes starting in March.

Spot gold was unchanged at $1,816.41 an ounce at 0324 GMT, after closing down 1.6% on Wednesday in its worst session since November 22. US gold futures fell 0.7% to $1,816.20.

“It’s been confirmed that they (the Fed) are going to raise rates. And that’s why we’re seeing the rise in Treasuries. And of course people are selling gold,” said Brian Lan, chief executive. dealer GoldSilver Central adding this bullion also came under pressure from a strong dollar.

Fed Chairman Jerome Powell struck a hawkish tone on Wednesday, pointing to a rate hike in March and saying it was possible to tighten policy further without hurting jobs.

Two-year U.S. Treasury yields hit a 23-month high at the start of Asian trading on Thursday, while 10-year yields hovered near one-week highs hit in the previous session.

Higher yields and rising interest rates reduce the attractiveness of bullion by increasing the opportunity cost of holding gold that does not pay interest.

The dollar index, measured against six major trading currencies, hit a level last seen on Nov. 22.

The United States said on Wednesday it had charted a diplomatic course to respond to hardline Russian demands in Eastern Europe, as Moscow held talks with Western countries and stepped up its military buildup near Ukraine with new forces. new exercises.

“Heightened geopolitical tensions have sparked some interest in safe havens, but gold prices tend to hold their value rather than recover significantly amid such a flight to safety,” he said. said Standard Chartered analyst Suki Cooper.

Holdings of the world’s largest gold-backed exchange-traded fund, SPDR Gold Trust, hit a five-month high on Wednesday.

Spot silver fell 0.8% to $23.30 an ounce. Platinum slid 1% to $1,021.00 and palladium lost 0.7% to $2,312.98.

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