Gold Prices Fall to Lowest in Almost Two Weeks as Bond Yields Rise

Gold prices slid to the lowest in nearly 2 weeks as U.S. bond yields surged, curbing the appeal of the non-interest bearing metal. 

The global bond rout continued, with U.S. 10-year Treasury yields jumping amid a debate on whether inflation is peaking. That helped inflation-adjusted rates turn positive for the first time in two years this week, a sign investors believe the Federal Reserve can raise interest rates to cool inflation without severely hurting the economy. Positive real rates reduce bullion’s appeal since it generates no interest.

“Yields are creeping higher again amid a raft of hawkish commentary from a variety of central banks that appears to be paving the way for increasingly aggressive action in the month ahead,” said Craig Erlam, senior market analyst at Oanda. “This appears to be weighing on gold.”

Gold Falls to Lowest in Almost Two Weeks as Bond Yields Rise
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Still, the precious metal is being supported by haven demand amid Russia’s war in Ukraine and rising inflation.

A Fed anecdotal survey showed inflationary pressures have remained strong, clouding the outlook for future growth. Gold prices are proving resilient — gaining more than 6% this year — as political and economic risks push investors toward the haven asset. That’s supporting purchases through gold-backed exchange-traded funds, which have seen holdings rise since last year, according to initial data compiled by Bloomberg.

Spot gold prices was down 0.3% at $1,951.60 an ounce by 4:19 p.m. in New York after falling as much as 1.1% earlier. Bullion for June delivery slipped 0.4% to settle at $1,948.20 on the Comex. Platinum, palladium and silver also fell. The Bloomberg Dollar Spot Index was up 0.4%.

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