The gold prices went down this Tuesday, March 14, pausing the strong comeback on Monday that was seen driven by the banking crisis in the United States, due to the dollar rally while the operators are positioned after knowing the data of inflationwhich could also influence the Federal Reserve’s interest rate strategy.
Spot gold was down 0.2% at $1,909.55 an ounce. US gold futures fell 0.3% to $1,910.90.
Rising 10-year US Treasury yields weighed on the appeal of gold, which offers no returns. Gold barely reacted to US Consumer Price Index (CPI) datawhich posted a monthly rise of 0.4% in February, as expected, after rising 0.5% in January.
“There is nothing in the post that scares off gold bullswho are looking to hedge against financial instability at a time when the Federal Reserve may accept (indirectly) that inflation will stay higher for longer,” said Nicky Shiels, head of metals strategy at MKS PAMP SA.
Currently, traders expect a 25 basis point interest rate hike from the Fed this month. Gold, seen as a hedge against economic uncertainty, becomes a more attractive bet in a low interest rate environment.
Gold prices rose more than 2% in the previous two sessionsas investors sought cover after the bankruptcy of US bank Silicon Valley Bank (SVB) spooked the market.
“As long as contagion risks from the ongoing SVB saga linger, which could increase downside risks, safe haven assets will remain well-supplied,” said Han Tan, chief market analyst at Exinity.
Spot silver rose 0.6% to $21.94 an ounce and platinum lost 1% to $986.17, while palladium rose 1.2% to $1,490.43.
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