Gold prices fall on higher U.S. Treasury yields and dollar.
The decline comes on the backdrop of expectations of new interest rate increases next month amid persistent inflation in the United States and elsewhere.Gold prices dropped more than 1% on April 19 on higher U.S. yields and a more expensive dollar, with a number of investors now convinced that the United States Federal Reserve is likely to postpone a pause in interest increases.
Spot gold was down 1.7% at $1,970.31 per ounce by 12:00 GMT, while U.S. gold futures were down 1.9% to $1,982.20, Reuters reported. Gold was trading below its 21-day moving average of around $1,990. At the same time, silver dropped 1.9% to $24.73 per ounce while platinum was down 1.5% to $1,066.42.was preceded by the rising of benchmark U.S. Treasury yields to an almost one-month high, which increased the value of the U.S.
According to Ole Hansen, head of commodity strategy at Saxo Bank, the correction was due to the markets readjusting their expectations of the Fed’s rate-hike path. He predicted that gold will rally again once interest rates peak. On Tuesday, St. Louis Federal Reserve Bank President James Bullard said that America’s central bank should continue to raise rates amid persistent inflation. Other Fed representatives are also expected to comment ahead of the monetary authority’s decision in May.
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