Gold Rises as Dip in U.S. Yields Eases Dollar’s Hold, Reports Reuters

By Ashitha Shivaprasad

Gold prices experienced a slight increase on Monday, as a decline in U.S. Treasury yields provided support against the backdrop of a relatively strong dollar and anticipated interest rate hikes, which had previously driven bullion down to its lowest level in over three and a half months.

By 1:52 p.m. ET (1752 GMT), gold was up 0.3% at $1,817.12 per ounce, recovering slightly from an earlier low of $1,786.60, its weakest point since January 31. The U.S. gold market settled at $1,814.

The modest uptick in gold prices can be attributed to the dip in Treasury yields and a small pullback in the dollar, according to RJO Futures senior market strategist Bob Haberkorn. However, he noted that the overall trend for the dollar remains strong due to the Federal Reserve’s aggressive stance on rate hikes.

“Considering the circumstances, gold is holding up better than expected. It should have dropped significantly lower… Support is expected to form just below the $1,800 mark. Additionally, there is considerable demand for physical gold and silver,” Haberkorn explained.

While the dollar eased slightly, it remained close to a two-decade high, which makes gold more expensive for international buyers. Although gold is typically viewed as a hedge against inflation, rising interest rates aimed at controlling inflation dampen the appeal for bullion, which does not yield interest.

Market analyst Fawad Razaqzada from City Index commented, “Many investors believe gold is significantly undervalued, and they may be more inclined to purchase the metal now that its prices have decreased.”

Spot silver saw a gain of 2.2%, reaching $21.53 per ounce, after hitting its lowest price since July 2020 on Friday.

Silver has faced challenges due to a broader sell-off in equities and gold, as it is primarily viewed as an industrial metal amid reduced growth forecasts, according to Rupert Rowling, a market analyst at Kinesis Money.

Platinum rose by 0.2% to $940.28, while palladium saw a sharper increase of 3.9%, reaching $2,019.70. Autocatalyst manufacturer Johnson Matthey indicated that the surplus in the platinum market is expected to decrease this year, while palladium markets are likely to shift into a deficit.