Gold dips as stronger dollar, yields dent appeal

April 6: Gold eased on Wednesday as hawkish comments from U.S. Federal Reserve officials boosted the dollar and Treasury yields to multi-year highs, denting the safe-haven metal’s appeal.

FUNDAMENTALS


* Spot gold was down 0.2% at $1,920.87 per ounce, as of 0114 GMT. U.S. gold futures fell 0.3% to $1,920.90.

* The dollar scaled a near two-year peak as Fed officials pushed for a quick reduction in the central bank’s bloated balance sheet, with one of them expressing openness to hefty rate increases of half a percentage point.

* A stronger dollar makes gold less attractive for other currency holders.

* Fed Governor Lael Brainard said she expected a combination of rate increases and a rapid balance sheet runoff to bring U.S. monetary policy to a “more neutral position” later this year, with further tightening to follow as needed.

* The Fed will release on Wednesday minutes of its March meeting that could provide details on its plans to reduce its bond holdings.

* U.S. Treasury yields hit multi-year highs on Wednesday as traders focused on the Fed’s plan for unwinding its balance sheet, with longer-term yields moving more quickly and partly reversing some of the recent inversions in the U.S. curve.

* The United States and its allies were set on Wednesday to impose new sanctions on Moscow over civilian killings in northern Ukraine, which President Volodymyr Zelenskiy described as “war crimes” demanding commensurate punishment.

* Spot silver edged 0.1% lower to $24.28 per ounce, platinum shed 0.3% to $964.90 and palladium was flat at $2,237.05.