Gold Eases on Rising Dollar and Treasury Yields

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On Monday, gold prices fell on surging U.S. dollar and Treasury yields. The prospect of aggressive rate hikes by the Federal Reserve bolstered the greenback to its highest level in almost two years. And a stronger dollar makes the bullion more expensive for investors using rival currencies. Meanwhile, the benchmark 10-year yield soared to 2.77%. It was the highest reading in more than three years. But fresh concerns about the war in Ukraine capped gold’s losses.

Spot gold is currently trading at $1,934.47 per ounce as of 0745 GMT.

On Sunday, Russian forces attacked eastern Ukraine with artillery and missiles. Ukrainian President Volodymyr Zelensky warned his countrymen that the coming week would be tense. He said Russian troops would launch an even larger operation in the east, and they may even use more air bombs. But Zelensky assured his people that Ukrainian forces are prepared for Russia’s actions and they would respond.

Michael McCarthy, the chief strategy officer at Tiger Brokers, commented that gold is still trading sideways. The potential escalation of the Ukraine crisis supports the bullion, but the possible rate hikes around the world countered its impact.

On the technical front, the FXStreet Insights Team said that gold’s range-bound price action could be considered a bearish consolidation phase. They explained that technical indicators struggle to gain any meaningful traction. Thus, they recommended waiting for a sustained trend before making aggressive directional bets. The team sees immediate resistance at $1,950 and support at $1,924.

DailyFX market analyst Diego Colman added that gold’s near-term trading outlook is neutral. It is because conflicting market forces will prevent the metal from rising or falling meaningfully. He predicted that the bullion prices would likely remain around current levels without any directional conviction.

In physical trading, the influx of old gold coins and jewelry widened the discounts on physical gold in India. Dealers offered discounts of as much as $40 per ounce. Jewelers reported lower sales than normal during the Gudi Padwa festival. In China, purchases were steady despite COVID-19 lockdowns. A local dealer said people remain interested in buying gold as a safe haven because of the Ukraine crisis.