The price of the metal fell 2.1% to 1,871.30 dollars an ounce, falling below last week’s low of $1,871.81 an ounce.
“Calls for more and more rate hikes by Fed officials have been setting the tone in the gold market of late, and that has also pushed up TIPS (Treasury Inflation Protected Securities) yields. 10yr…this is providing the biggest headwinds for gold, along with a fairly strong dollar,” said Julius Baer analyst Carsten Menke.
The US central bank’s Federal Open Market Committee is scheduled to start its two-day meeting on May 3 and announce its decision the following day.
US policymakers appear poised to carry out a series of aggressive rate hikes through at least the summer to tackle rapid inflation and rising labor costs, even as two reports released on Friday showed tentative signs that both things could be coming to an end.
A 50 basis point rate hike on Wednesday shouldn’t be a surprise, nor should it additionally weigh on the price of gold, especially since Fed Chairman Jerome Powell has announced it more or less in advance, analysts at Commerzbank wrote in a note.
Gold is highly exposed to interest rates as higher rates raise the opportunity cost of holding non-performing assets and strengthen the dollar, which gold is priced against, making bullion more expensive for holders of other currencies. .
The dollar held near 20-year highs, while benchmark 10-year US Treasury yields rose toward recent multi-year highs.
Among other precious metals, Spot silver was down 0.3% at $22.68 per ounce, palladium was down 2.2% at $2,269.68 and platinum was up 0.4% at $935.
Source: Ambito
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