Gold dips as bond yields rise before Fed meeting

div classBodysc17zpet90 cdBBJodivpBy Bharat Gautamp

pReuters – Gold prices fell on Monday as elevated U.S. Treasury yields pressured demand for zeroyield bullion, ahead of a widely expected big interest rate hike by the Federal Reserve to contain rising inflationary pressures.pdivdivdiv classBodysc17zpet90 cdBBJodiv

pSpot gold retreated 0.4 to 1,888.56 per ounce, as of 0241 GMT. U.S. gold futures dropped 1.3 to 1,886.90.p

pThe market is concerned that the Fed could be quite hawkish, pricing in a 50 basis point hike, and it could be 75 basis points in July, said Stephen Innes, managing partner at SPI Asset Management.p

pThe U.S. central banks Federal Open Market Committee is scheduled to begin its twoday meeting on interest rates on May 3 and announce its decision the next day.p

pFed policymakers look set to deliver a series of aggressive rate hikes at least until the summer to deal with rapid inflation and surging labour costs, even as two reports released on Friday showed tentative signs that both may be cresting. p

pThe Fed is still behind, and has constantly tried to keep up with these expectations, so theres a good chance they are looking at current inflation metrics, and “are going to continue to beat the hawkish drum,” Innes said. p

pBenchmark 10year U.S. Treasury yields rose towards recent multiyear peaks, pressuring demand for gold.p

pHigher shortterm U.S. interest rates and bond yields tend to increase the opportunity cost of holding bullion, which yields nothing. Bullion is also seen as a safe store of value during times of economic and political crises. p

pAround 100 civilians evacuated from the ruined Azovstal steelworks in Mariupol were due to arrive in a Ukrainianheld city on Monday, Ukrainian President Volodymyr Zelenskiy said, after U.S. Speaker Nancy Pelosi made a surprise visit to Kyiv. p

pSpot silver fell 0.6 to 22.60 per ounce, platinum dipped 0.5 to 926.58, and palladium slid 2.2 to 2,268.48.