Gold futures closed lower on Tuesday (April 5) as the dollar and rising U.S. Treasury yields pressured the market. Representatives of the U.S. Federal Reserve (Fed) again advocated several interest rate hikes this year.
- The gold contract was down $6.5, or 0.34%, at $1,927.5 per ounce.
- Silver was down 5.6 cents, or 0.23%, at $24.534 an ounce.
- The platinum contract was down $17.9, or 1.81%, at $973.1 an ounce.
- Palladium fell $39.70, or 1.74 percent, at $2,235.30 an ounce.
The dollar index against the six major currencies in a basket of currencies rose 0.48% to 99.4710, while the yield on the 10-year U.S. Treasury note rose to 2.465%.
The gold market also came under pressure as Federal Reserve Vice Chairwoman Lael Brainard reiterated that the Fed will raise interest rates several times this year and accelerate the reduction of its balance sheet to curb inflation.
“Currently, inflation is much too high and is subject to upside risks. The [Federal Open Market] Committee is prepared to take stronger action if indicators of inflation and inflation expectations indicate that such action is warranted.” The [FOMC] will continue tightening monetary policy methodically through a series of interest rate increases and by starting to reduce the balance sheet at a rapid pace as soon as our May meeting. Given that the recovery has been considerably stronger and faster than in the previous cycle, I expect the balance sheet to shrink considerably more rapidly than in the previous recovery, with significantly larger caps and a much shorter period to phase in the maximum caps compared with 2017-19,”Brainard said on Tuesday.
Inflation in the U.S. has reached historic levels not seen in 40 years. The Fed is now forced to stabilize prices within its means, which will not be an easy task. Quantitative Tightening (QT) has already been tried by the Fed in 2018. After that, stock markets plummeted by more than 20%.
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Wednesday, April 6, 2022