Gold steady as dollar slide balances rate-hike fears
Gold was little changed on Wednesday as
it failed to make the most of a pullback in the dollar, with
demand for bullion being restrained amid prospects of aggressive
monetary policies and rising U.S. bond yields.
Spot gold was flat at $1,711.00 per ounce by 0248
GMT. U.S. gold futures fell 0.1% to $1,708.80.
The dollar eased for a fourth straight session,
though it stayed at elevated levels, making greenback-priced
bullion less expensive for buyers holding other currencies.
Benchmark U.S. 10-year Treasury yields rose, lowering the
appeal of non-yielding bullion.
Gold seems to be the odd person out, not participating in
any broader relief rally on a lower dollar, said Stephen Innes,
managing partner at SPI Asset Management, adding that central
banks’ front-loaded rate hikes are clearly tarnishing bullion’s
European Central Bank (ECB) policymakers are considering
raising rates by a larger-than-expected 50 basis points at their
meeting on Thursday to tame record-high inflation, two sources
with direct knowledge of the discussion told
Since the dollar is reacting to a (possibly) more aggressive
rate hike by the ECB, gold isn’t getting the bounce one would
typically expect via a softer greenback, Innes said.
Although gold is seen as an inflation hedge, higher interest
rates and bond yields raise the opportunity cost of holding
bullion, which yields no interest.
Australia’s top central banker on Wednesday indicated a
steady drum beat of interest rate rises were needed to stop a
damaging inflationary cycle developing.
Meanwhile, Asian shares extended a global rally on Wednesday
as strong U.S. corporate earnings and the expected resumption of
Russian gas supplies to Europe helped lift sentiment and ease
fears of a recession.
Spot silver firmed 0.2% to $18.77 per ounce, platinum
rose 0.5% to $879.02, and palladium climbed 1% to
(Reporting by Bharat Govind Gautam in Bengaluru; editing by