Gold slips over 1% as US yields jump on rate hike bets
* Holdings in SPDR Gold Trust fell 0.3% on Monday
* The 10-year US Treasury exceeds its three-month peak
* The dollar rises against its rivals
* Palladium down 3% (Redesign, added comments, updated prices)
September 28 (Reuters) – Gold prices fell more than 1% to a seven-week low on Tuesday, as the dollar strengthened and US Treasury yields rose amid expectations of a hike faster than expected interest rates by the Federal Reserve.
Spot gold was down 0.8% at $ 1,735.54 an ounce at 10:48 a.m. EDT (1448 GMT), after falling to its lowest level since August 11 at $ 1,726.19 earlier in the session.
US gold futures fell 0.8% to $ 1,738.40 an ounce.
“The dot charts drawn by FOMC members signaling an earlier than expected rise in Fed funds rates, and the rising yield curve continue to have a negative impact on gold,” Bart said. Melek, Head of Commodity Strategies at TD Securities.
Higher interest rates increase the opportunity cost of holding unproductive bullion.
Benchmark US Treasury yields climbed above 1.5% to their highest level in more than three months as markets began to price in higher future inflation.
Some investors see gold as a hedge against higher inflation that could follow stimulus measures, but higher Treasury yields dampen some of the appeal of the unproductive commodity.
Indicative of sentiment, the holdings of the SPDR Gold Trust fell 0.3% to 990.32 on Monday.
Meanwhile, Fed Chairman Jerome Powell said on Tuesday that the US economy was still far from peaking in jobs, a key part of the central bank’s demands to raise interest rates.
The dollar index rose 0.3%, making gold more expensive for holders of other currencies.
“The dollar has appreciated further over the past few days, putting more pressure on gold prices. Market participants seem to expect earlier rate hikes to be implemented by the Fed, ”Commerzbank analysts said in a note.
Elsewhere, silver fell 0.9% to $ 22.44 an ounce, palladium fell 3% to $ 1,905.94, while platinum fell 0.5% to 975.93 $. (Reporting by Brijesh Patel in Bengaluru; editing by Uttaresh.V)
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