By Bharat Gautam
(Reuters) – Gold prices fell on Wednesday to their lowest in nearly two weeks, as an elevated U.S. dollar and Treasury yields continued to weigh on demand for bullion.
Spot gold was down 0.4% at $1,941.40 per ounce at 0741 GMT, after hitting its lowest since April 8. U.S. gold futures fell 0.7% to $1,944.80.
On Tuesday, prices fell up to 1.8% as strength in the dollar and benchmark U.S. 10-year Treasury yields overshadowed safe-haven inflows into the metal.
“With the U.S. dollar still firm today, and with China declining to lower its 1- and 5-year loan prime rates, it looks like the long squeeze (in gold) is continuing in Asia,” said OANDA senior analyst Jeffrey Halley.
The dollar held near recent highs, making greenback-priced gold less attractive for other currency holders. [USD/]
China surprisingly kept its benchmark lending rates steady on Wednesday, with markets seeing the move as indicating caution in rolling out more easing measures as the economy slows due to COVID-19 lockdowns.
U.S. Treasury yields hovered near multi-year highs, as investors prepared for the Federal Reserve to aggressively raise interest rates. [US/]
Gold is highly sensitive to rising U.S. short-term interest rates and bond yields, which increase the opportunity cost of holding non-yielding bullion.
On Monday, gold came close to the key level of $2,000 per ounce but has since come under some pressure.
Underpinning demand has been gold’s capacity to hedge multiple risks, namely the war in Ukraine, the sharp rise in inflation globally, the Fed’s hawkish pivot, and the subsequent inversion of the 2-year/10-year U.S. Treasury yield curve, UBS analysts said in a note.
Spot silver dipped 0.8% to $24.96 per ounce, and platinum eased 1.5% to $976.47, while palladium rose 0.3% to $2,379.85.
(Reporting by Bharat Govind Gautam in Bengaluru; Editing by Sherry Jacob-Phillips, Rashmi Aich, Uttaresh.V and Bradley Perrett)
