Gold Wavers as Bond Yields Climb on Bets Over Fed Rate Hikes
Gold steady as investors weighed the outlook for monetary policy against the risks posed by the omicron virus variant.
(Bloomberg) -- Gold headed for a third decline in four sessions as U.S. bond yields surged amid increased speculation that the Federal Reserve will deliver more than a quarter-percentage point interest-rate hike in March.
Yields on 10-year Treasuries hit the highest since January 2020 as Fed officials say they may need to implement hikes faster than expected to curb the hottest inflation since the 1980s. Higher rates make bullion less competitive against assets that offer interest. A stronger dollar also dented demand for gold.
“As the market continues to pencil in additional Fed rate hikes, with a full four hikes priced for 2022 and a near-certain March rate hike priced, precious metals appear vulnerable to a consolidation,” TD Securities strategists led by Bart Melek said in a note.
Gold declined for the first time in three years in 2021 amid the prospects of policy tightening and the deployment of vaccines. While bullion’s traditional role as an inflation hedge and the uncertainty over omicron’s impact has supported demand for the haven asset, gold may trade down toward $1,800 an ounce in the short term, according to Ole Hansen, head of commodity strategy at Saxo Bank A/S.
Spot gold slipped 0.3% to $1,814.614 an ounce as of 3:00 p.m. in New York. Bullion for February delivery fell 0.2% to settle at $1,812.40 on the Comex. The Bloomberg Dollar Spot Index climbed 0.4%. Silver, platinum and palladium advanced.
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