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Gold and other precious metals dropped on
Thursday, with palladium shedding more than 8%, as investors
flocked to the dollar driven by bets the U.S. Federal Reserve
will stick to aggressive rate hikes.
Spot gold fell 0.7% to $1,839.01 per ounce by 10:29
a.m. EDT (1429 GMT). U.S. gold futures were down 0.7% at
$1,841.60.
“Dollar is rallying as things potentially look negative in
the U.S., which is hurting gold. Also, the market is realizing
the likelihood of seeing pretty aggressive interest rate
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increases,” said Bart Melek, head of commodity strategies at TD
Securities.
Rival safe-haven dollar climbed to fresh 20-year
highs — making gold less appealing for other currency holders
— driven by concerns tighter monetary policies to tame surging
inflation will hurt the global economy.
Although it is considered a hedge against inflation and a
safe bet during economic and political turmoil, gold is highly
sensitive to rising U.S. interest rates, which increase the
opportunity cost of holding non-yielding bullion.
“However, gold is holding relatively better when compared to
the industrial precious metals,” the demand for which could be
hurt in a recession environment, Melek added.
Declines in gold were, however, capped by a slide in the
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benchmark 10-year Treasury yields , which hit the
lowest level in two weeks.
Spot silver fell 2.1% to $21.11 per ounce – it hit
its lowest since July 2020 earlier in the session.
“Silver is falling faster than gold, that’s a bearish sign
for the whole complex. With the ongoing lockdowns in China,
industrial metals are struggling and US institutional investor
who’s bailing out a gold ETF by extension bails out of silver as
well,” independent analyst Ross Norman said.
Palladium slid 5.4% to $1,926.13, having earlier slid
as much as 8.2% to its lowest since January at 1,867.68.
Platinum dropped 4% to $952.86.
(Reporting by Ashitha Shivaprasad and Eileen Soreng in
Bengaluru; Editing by Krishna Chandra Eluri)
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