Gold prices fell on Monday as US rate-hike expectations lifted Treasury yields to their highest in a month, while hopes of progress in Russia-Ukraine peace talks further assuaged bullion’s safe-haven appeal.
Gold is highly sensitive to rising US interest rates, which increase the opportunity cost of holding non-yielding bullion.
Spot gold was down 0.5% at $1,976.31 per ounce by 0457 GMT. US gold futures shed 0.3% to $1,979.40.
“One key reason is surging Treasury yields. Also market seems to be pricing in on the FOMC (Federal Open Market Committee) meeting on Wednesday at which the US Federal Reserve may start to kick off the tightening cycle. So, this is a negative factor for gold,” said Margaret Yang, a strategist at DailyFX.
“Given the fact that both sides are willing to talk, I think the worst of the Ukraine crisis is probably behind us. It’s unlikely that gold prices will surge beyond the previous high from last week or reach a record high anytime soon.”
Benchmark US 10-year Treasury yields rose to a near one-month high as the US Federal Reserve is widely expected to raise interest rates by a quarter of a percentage point at a two-day event later this week.
Pressuring gold’s safe-haven demand, global shares advanced on hopes of a respite in the Ukraine crisis even as fighting raged on.
Palladium, used by automakers in catalytic converters to curb emissions, slumped 4.1% to $2,700.75 per ounce. The metal hit a record high of $3,440.76 last week, driven by fears of supply disruptions from top producer Russia.
Russian mining giant Nornickel is facing significant logistics issues but has managed to secure alternative routes for its palladium deliveries.
Among other metals, spot silver shed 0.4% to $25.69 per ounce, while platinum dropped 1.8% to $1,060.45.
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