Gold futures closed slightly lower on Friday (March 25) after the precious metal rose back above $1,960 on Thursday. Gold remains in demand as global inflation remains a major concern for investors. In addition, several countries are planning to distribute currency units to the population again, which will further fuel inflation. Pressure on the gold price also came from the sharp rise in U.S. Treasury bond yields. This increases the opportunity cost of owning gold, as gold is an asset that does not yield a return in the form of interest.
- The gold contract was down $8, or 0.41%, at $1,954.2 an ounce.
- Silver was down 30.5 cents, or 1.18%, at $25.615 an ounce.
- The platinum contract was down $22.7, or 2.2%, at $1,008.5 an ounce.
- Palladium was down $136.30, or 5.39%, at $2,394.30 an ounce.
Rising U.S. government bond yields put pressure on gold futures. The 10-year bond yield rose to its highest level in almost three years as markets worried about high inflation and feared that Fed rate hikes would slow the economy. Economic data released yesterday from the U.S. also matched this. Michigan consumer sentiment was 59.4, which was below analysts’ expectations and the lowest level in 10 years. In addition, pending home sales fell by 4.1% in February, after analysts had expected a 1% increase.
The yield on 10-year bonds was 2.492%, having risen above 2.50% for the first time since May 2019.
Traders continue to monitor the situation in the Russia-Ukraine conflict and assess the Federal Reserve’s (Fed) comments on tightening monetary policy this week.
Fed Chairman Jerome Powell has signaled an accelerated rate hike, saying inflation is too high. If necessary, the Fed will raise rates by more than 0.25% in one or more meetings.
The spot Market is Closed
Saturday, March 26, 2022