Gold prices hold steady

Bengaluru — Gold prices held steady on Tuesday as US treasury yields hit multiyear highs after an aggressive inflation stance by the Federal Reserve chair, while an intensifying conflict between Russia and Ukraine supported bids for the safe-haven metal.

Spot gold was flat at $1,936.82 an ounce by 3.47am GMT. US gold futures were up 0.4% at $1,937.30.

“There are no new inputs to materially move the price in Asia, leaving gold stuck between higher US yields and a ramp-up in risk-aversion sentiment,” said Oanda senior analyst Jeffrey Halley.

Fed chair Jerome Powell indicated that the US central bank would raise interest rates by bigger-than-usual amounts if necessary to bring down inflation that was running “much too high”.

The yield on the benchmark 10-year Treasury note jumped above 2.3% for the first time since May 2019, while a closely watched gap between rates for two- and 10-year treasury notes flattened further, a potential sign of an economic downturn.

Sharp moves in the US treasury market are pointing to the risk of an approaching recession, with markets doubting the Fed’s plan to engineer a “soft landing” for the economy as it hikes interest rates to fight inflation, market experts said. Higher yields and interest rates tend to increase the opportunity cost of holding non-interest paying gold.

Slowing gold’s slide was Ukraine’s remark on Monday that it would not obey ultimatums from Russia after Moscow demanded it stop defending besieged Mariupol.

The Ukraine conflict is likely to go on and increase supply chain tensions and inflation pressures, supporting gold, said Nicholas Frappell, a global GM at ABC Bullion.

Palladium, used by carmakers in catalytic converters to curb emissions, fell 0.5% to $2,572.69 an ounce. Spot silver rose 0.5% to $25.32 an ounce and platinum gained 0.3% to $1,039.99.

Reuters