Gold Prices Fall as Investors Assess Bets on Faster US Rate Hikes

The gold prices They fell on Tuesday and the dollar rallied ahead of the release of the latest US inflation figures, as investors anticipated the US Federal Reserve would target aggressive interest rate hikes this year.

At 10:17 GMT, spot gold was down 0.1% at $1,818.70 an ounce. US gold futures were down 0.1% at $1,819.90.

On Thursday, the US Consumer Price Index for January will be released and the market expects it to show a monthly increase of 7.3%, which would be its biggest increase since 1982.

A robust inflation figure could increase pressure on the Fed to tighten faster, raising the opportunity cost of holding non-interest bearing bullion.

“There has been a very clear shift to a more hawkish line in recent months and that is increasingly the case as price pressures mount. Another inflation hit on Thursday is likely to trigger more concerns and could send ripples through the markets.said Craig Erlam, Senior Market Analyst at OANDA.

Gold, which is seen as a hedge against inflation and geopolitical risks, rose to the highest level since Jan. 26 on Monday.

Despite a slight pullback on Tuesday, gold is in demand as a safe haven given ongoing tensions around Russia and Ukraine, analysts said.

The dollar index gained 0.2%, while 10-year US Treasury yields rose to their highest levels in more than two years.

Gold is resisting the continued rise in bond yields, Commerzbank said in a note. Less hawkish comments from European Central Bank President Christine Lagarde on Monday likely also contributed to the rise in gold’s price, she added.

Among other precious metals, silver was down 0.4% at $22.89, platinum was down 1.2% at $1,007.45 and palladium was down 1.2% at $2,235.73.

With information from Reuters.