Gold was down on Monday morning in Asia, hitting its lowest point in more than two weeks. The U.S. Federal Reserve is widely expected to take an increasingly hawkish approach to its monetary policy. This boosted the dollar and put pressure on the yellow metal.Gold futures fell 0.89% to $1,917.10 by 1:50 AM ET (5:50 AM GMT), its lowest since Apr. 7.
Although the 10-year U.S. Treasury yield is nearing 3% and theoretically that would be a tipping point for gold, it is more about real yields that are starting to catch up and that will weigh on gold, SPI Asset Management. managing partner Stephen Innes told Reuters.
Investors have already priced in bets for a half-percentage point interest rate hike when the Fed hands down its policy decision in May 2022 and are increasing bets for even bigger hikes in subsequent months.
The dollar, which normally moves inversely to gold, inched up on Monday, nearing its highest level in two years.
Gold still has some intrinsic value when economies slow because then, banks are unwilling to hike interest rates, according to Innes. “The market is pricing in rates, rates, rates. But what happens if the economy starts tanking very aggressively?” he added.
Meanwhile, U.S. Secretary of State Antony Blinken and Defense Secretary Lloyd Austin arrived in the Ukrainian capital of Kyiv on Sunday and held talks with President Volodymyr Zelenskiy, according to an aid to the Ukrainian leader. The war in Ukraine continues, with the conflict precipitated by the Russian invasion on Feb. 24 entering its third month.
In other precious metals, silver fell 1%, platinum eased 0.4% to $927.00, and palladium slid 2.9%.