Gold Price Spikes as U.S Bond Yields Peak
Gold closed higher on Friday even as United States (U.S) bond yields rose to the highest in more than three years ahead of expected rate hikes from the United States (U.S) Federal Reserve.
Federal Market Open Committee (FOMC) minutes for March indicate a decision to reduce Fed’s balance sheet by $95 billion per month, signalling a hawkish tilt as the market anticipates a 50 basis points hike.
Meanwhile, commodities prices are adjusting downward, albeit slow, gold price has been moderately affected, though it had peaked after Russia’s invasion into Ukraine.
Market data shows that Gold for June delivery closed up US$7.80 to settle at US$1,945.60 per ounce as of Friday’s close. Silver and palladium also see a moderate jump. READ: Gold Falls as Hawkish Fed Minutes Boost Bond Yields
The price of the metal has firmed over the US$1,900 mark even after the Federal Reserve last month raised interest rates for the first time in four years, with additional increases expected, as the war in Ukraine and inflation prompt safe-haven buying.
“Yields on ten-year US Treasuries have risen to their highest level in over three years and real interest rates are gradually approaching zero; the last time they were in positive territory was a good two years ago.
“None of this has had any impact on the gold price, however … Against this backdrop, gold is showing relative strength, in our opinion,” Commerzbank analyst Daniel Briesemann said in a note.
The yield on the US 10-year note was last seen up 9.7 basis points to 2.713%, the highest since January 2019 after 25 basis points interest rate hike as the U.S seeks to stem inflation pressures.
At weekend, the ICE dollar index also rose to recent highs, last seen up 0.12 points to 99.87, after earlier touching 100.19, the highest since May 2020. # Gold Price Spikes as U.S Bond Yields Peak
