Gold prices extend losses as firmer Treasury yields dent appeal

GOLD prices eased on Wednesday (Apr 20), following a sharp drop in the previous session, as elevated US Treasury yields continued to pull investors away from zero-yield bullion.

Spot gold was down 0.2 per cent at US$1,946.04 per ounce, as of 12.38 am GMT. US gold futures fell 0.5 per cent to US$1,949.50.

In the previous session, gold prices fell up to 1.8 per cent to an over 1-week low as a stronger US dollar and rising Treasury yields overshadowed safe-haven inflows into bullion.

US Treasury yields continued to surge to multi-year highs as investors prepared for the Federal Reserve to aggressively raise rates as the central bank tries to stem soaring inflation.

Gold is highly sensitive to rising US interest rates and higher yields, which increase the opportunity cost of holding non-yielding bullion.

The dollar held near recent highs, making the greenback-priced gold less attractive for other currency holders.

The International Monetary Fund on Tuesday slashed its forecast for global economic growth by nearly a full percentage point, citing Russia's war in Ukraine, and warning that inflation was now a "clear and present danger" for many countries.

Major central banks, already plotting interest rate hikes in a fight against inflation, are also preparing a common pullback from key financial markets in a first-ever round of global "quantitative tightening" expected to restrict credit and add stress to an already-slowing world economy.

Spot silver dipped 0.5 per cent to US$25.04 per ounce, platinum eased 1.1 per cent to US$979.74, and palladium edged down 0.1 per cent to US$2,369.36. REUTERS