Dollar rally accelerates slide in metals
Reuters
Published May 12, 2022 00:41
Updated May 12, 2022 14:17
By Ashitha Shivaprasad
(Reuters) - Gold and other precious metals dropped on Thursday, with palladium shedding more than 8%, as investors flocked to the dollar driven by bets the U.S. Federal Reserve will stick to aggressive rate hikes.
Spot gold fell 1.6% to $1,823.14 per ounce by 01:51 p.m. EDT (1751 GMT). U.S. gold futures settled down 1.6% at $1,824.60.
"Dollar is rallying as things potentially look negative in the U.S., which is hurting gold. Also, the market is realising the likelihood of seeing pretty aggressive interest rate increases," said Bart Melek, head of commodity strategies at TD (TSX:TD) Securities.
Rival safe-haven dollar climbed to fresh 20-year highs – making gold less appealing for other currency holders driven by concerns tighter monetary policies to tame surging inflation will hurt the global economy.
Although it is considered a hedge against inflation and a safe bet during economic and political turmoil, gold is highly sensitive to rising U.S. interest rates, which increase the opportunity cost of holding non-yielding bullion.
"However, gold is holding relatively better when compared to the industrial precious metals," the demand for which could be hurt in a recession environment, Melek added.
Declines in gold were, however, capped by a slide in the benchmark 10-year Treasury yields, which hit the lowest level in two weeks.
Spot silver fell 4.3% to $20.63 per ounce – it hit its lowest since July 2020 earlier in the session.
"Silver is falling faster than gold, that's a bearish sign for the whole complex. With the ongoing lockdowns in China, industrial metals are struggling and US institutional investor who's bailing out a gold ETF by extension bails out of silver as well," independent analyst Ross Norman said.
Palladium slid 7% to $1,892.69, having earlier slid as much as 8.2% to its lowest since January at 1,867.68.
Platinum dropped 5.2% to $940.51.
Get The App
Written By: Reuters
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.