Gold and other precious metal prices fell on Wednesday due to higher yields in the US and the national currency. The drop comes against the backdrop of expectations for further interest rate hikes next month amid persistent inflation in the United States and elsewhere.
Gold and silver slide as investors bet on another rate hike in May
Gold prices fell more than 1% on April 19 on higher US yields and a more expensive dollar, and many investors are now convinced that the US Federal Reserve is likely to postpone a pause in interest increases.
Spot gold was down 1.7% at $1,970.31 an ounce as of 12:00 GMT, while US gold futures were down 1.9% at $1,982.20, Reuters reported. Gold was trading below its 21-day moving average of around $1,990. At the same time, silver fell 1.9% to $24.73 an ounce, while platinum was down 1.5% at $1,066.42.
The decline in precious metal prices was preceded by benchmark US Treasury yields rising to a near-month high, boosting the value of the US dollar and making gold less affordable for buyers who They pay with other currencies.
According to Ole Hansen, head of commodity strategy at Saxo Bank, the correction was due to markets readjusting their expectations about the Fed’s rate hike path. He predicted that gold will rise again once interest rates reach their peak.
On Tuesday, Federal Reserve Bank of St. Louis President James Bullard said the US central bank should continue raising rates amid persistent inflation. Other Fed officials are also expected to comment ahead of the Fed’s decision in May.
Meanwhile, despite eurozone inflation easing in March, core indicators remain high and members of the European Central Bank’s Governing Council said Europeans are likely to see another interest rate hike after their meeting in early May. With the UK experiencing the highest inflation in Western Europe, the same can be expected from the Bank of England as well.
What are your predictions for gold prices in the near future? Share them in the comments section below.
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