Gold prices tumbled on Tuesday as US Treasury yields hit multi-year highs after Federal Reserve took an aggressive stance on inflation, while safe-haven bullion remained underpinned by the escalation in the Russia-Ukraine war.
Higher yields and interest rates tend to increase the opportunity cost of holding non-interest paying gold.
Spot gold was down 0.2 percent at $1,931.84 per ounce by 0105 GMT, while US gold futures were flat at $1,930.20. Earlier, Fed chair Powell indicated that the US central bank would further increase interest rates if necessary to bring down inflation.
The yields on the benchmark 10-year Treasury note rose above 2.3 percent for the first time since May 2019, while a closely watched gap between rates for two- and 10-year Treasury notes flattened further, a potential sign of an economic downturn.
Sharp moves in the US bond market point to the risk of an approaching recession. Gold prices were down despite the war in the eastern Europe continued to rage after Ukraine on Monday refused to obey the ultimatums from Russia that it should stop defending besieged Mariupol.
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Meanwhile, European Union governments were considering an oil embargo on Russia over its invasion of Ukraine when they meet this week with US President Joe Biden for a series of summits.
Palladium, used by automakers in catalytic converters to curb emissions, tumbled 0.5 percent to $2,571.64 per ounce. The metal has hit a record high of $3,440.76 on March 7, driven by fears of supply disruptions from top producer Russia. Spot silver fell 0.2 percent to $25.15 per ounce, while platinum shed 0.3 percent to $1,033.99 on Tuesday.
Wall Street witnessed a volatile day on Monday. The US stock markets closed slightly lower on Monday after giving up an early gain and bouncing around for much of the day.
(Edited by : Bivekananda Biswas)
First Published: Mar 22, 2022 9:35 AM IST
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