Gold Up, But Near Three-Week Low as Fed Rate Hike boosts Treasury Yields
Investing.com
Published Mar 17, 2022 01:15AM ET
By Gina Lee
Investing.com – Gold was up on Thursday morning in Asia but remained near a three-week low hit during the previous session as the U.S. Federal Reserve's interest rate hike lifted U.S. Treasury yields. Hopes for progress in ceasefire talks between Russia and Ukraine also dimmed the yellow metal’s safe-haven appeal.
Gold futures rose 1.31% to $1,934.30 by 1:15 PM ET (5:15 AM GMT) after falling to its lowest since Feb. 28 at $1,894.70 on Wednesday.
The Fed hiked its interest rate to 0.5% as it handed down its policy decision on Wednesday. It was the first time that the central bank raised interest rates for the first time since 2018, and hikes at all six remaining meetings in 2022 are likely. Fed Chairman Jerome Powell said that the U.S. economy is “very strong” and can handle monetary tightening. The Fed's decision also saw U.S. 10-year Treasury yields climb to their highest level since May 2019.
Across the Atlantic, the Bank of England will hand down its policy decision later in the day. European Central Bank President Christine Lagarde, Executive Board member Isabel Schnabel, Governing Council member Ignazio Visco, and Chief Economist Philip Lane will also speak at a conference on the same day.
In Asia Pacific, the Bank of Japan will hand down its policy decision on Friday.
Investors are also monitoring the peace talks between Russia and Ukraine, a potential resolution to the conflict that began with the Russian invasion on Feb. 24. Ukrainian President Volodymyr Zelenskiy said negotiations were becoming "more realistic" while Russia said proposals under discussion were "close to an agreement."
Holdings of the SPDR Gold Trust (P:GLD) rose 0.8% to 1,070.53 tons on Wednesday, the highest since March 2021.
In other precious metals, palladium rose 1.8% to $2,452.33 per ounce. The auto-catalyst metal hit a record high of $3,440.76 hit on Mar. 7, as concerns about supply disruptions from Russia continue.
Silver was up 0.3% and platinum rose 0.7%.
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