The Business Times

Gold set for second weekly fall as Fed hawks lift Treasury yields

Published Fri, Oct 21, 2022 · 10:02 AM

GOLD prices on Friday (Oct 21) were set for a second weekly decline as US Treasury yields held near multi-year highs following strong labour market data and hawkish comments from Federal Reserve officials, dampening the appeal for zero-yield bullion.

Spot gold was flat at US$1,627.20 per ounce, as of 0118 GMT, and lost 0.8 per cent so far for the week.

US gold futures were down 0.4 per cent at US$1,630.10.

The benchmark 10-year Treasury yields held near a fresh 14-year peak hit on Thursday while the dollar index ticked 0.1 per cent higher.

Philadelphia Federal Reserve president Patrick Harker said on Thursday given the current inflation situation, “the Fed is actively trying to slow the economy”, and “we are going to keep raising rates for a while”.

Although gold is considered a hedge against inflation, higher interest rates increase the opportunity cost of holding the bullion, which yields nothing.

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The number of Americans filing new claims for unemployment benefits fell unexpectedly last week, indicating the labour market remains tight. Separate data showed the US existing home sales dropped for an eighth straight month in September.

Swiss gold exports to top markets China and India increased in September, while shipments to Turkey rose to the highest since April 2013, Swiss customs data showed on Thursday.

Holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, fell 0.19 per cent to 930.99 tonnes on Thursday.

Spot silver eased 0.2 per cent to US$18.63 per ounce, platinum fell 0.4 per cent to US$910.30 and palladium dropped 1.4 per cent to US$2,028.43. REUTERS

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