Gold maintains decline as bond yields rise on Fed rate hike bets

Gold maintains decline as bond yields rise on Fed rate hike bets

On the virus, a study in South Africa indicated a strong wave of coronavirus infections driven by the omicron variant could speed up the end of pandemic disruptions, as it seems to cause less severe illness and shields against the delta strain. Still, the World Health Organization warned that comprehensive strategies are still needed to reduce transmission and serious disease.

Gold held the earlier day’s misfortune as security yields hopped on speculation that the Federal Reserve will be more aggressive in fixing monetary policy to contain many years high inflation. A March rate climb is just about settled and will be the first of many builds this year, as per Bloomberg Economics. While a quarter-point increment is as yet the most probable scenario, swap markets are presently pricing in excess of 25 basis purposes of tightening by the end of March. The yield on 10-year Treasuries spiked to the most noteworthy since January 2020, weighing on demand for non-interest bearing bullion.

Gold is holding above $1,800 an ounce after dropping for the first time in three years in 2021 as central banks globally started dialing back on pandemic-era stimulus. Still, bullion’s traditional role as an inflation hedge and the uncertainty over omicron’s impact is supporting demand for the haven asset.

“Gold prices are clearly hanging in there given that Treasury yields have skyrocketed this month,” said Edward Moya, a senior market analyst at Oanda Corp. “Wall Street is pricing in a much more aggressive Fed tightening strategy over these next several months as inflation runs wild. Gold is in for a choppy period, but the medium-term outlook still remains bullish if prices can hover around the $1,800 level.”

Spot gold was flat at $1,814.07 an ounce by 1:37 p.m. in Singapore, after dropping 0.3% Tuesday. The Bloomberg Dollar Spot Index edged lower after adding 0.4% in the previous session. Silver, platinum and palladium retreated.

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