Gold remains stable and falling dollar offsets expectations of rate hikes

Gold steadied on Wednesday, helped by a weaker dollar offsetting pressure from higher US Treasury yields, as investors await the Federal Reserve’s first interest rate hike in the era of the pandemic.

At 1015 GMT, spot gold was trading steady at $1,917.91 per ounce, after hitting a low since March 1 at $1,906 on Tuesday. US gold futures fell 0.3% to $1,923.40.

“Gold bears are taking a breather pending the expected policy guidance from the Fed,” said Han Tan, chief markets analyst at Exinity.

“Once the gold markets have fully digested the policy signals from the fedattention could quickly return to the ever-changing war between Russia and Ukraine,” Tan said, adding that any escalation of the crisis would lead to further rises in the price of gold.

The Fed is expected to announce its first rate hike in three years to tackle rising inflation.

The gold it is highly sensitive to rate hikes and thus to the rise in the 10-year Treasury yield, which increases the opportunity cost of holding non-interest-bearing bullion.

In other precious metals, spot silver was down 0.5% at $24.74 an ounce and platinum was up 2.7% at $1,012.55.

Palladium gained 2% to $2,471.55, falling off a more than two-week low hit on Monday, amid supply fears.