Gold slides to near 3-week low as yields firm on rate-hike bets

Gold prices slipped to a near three-week low on Tuesday as the renomination of U.S. Federal Reserve Chair Jerome Powell fueled bets of faster interest rate hikes, bolstering the dollar and Treasury yields

Spot gold fell as much as 1.2% to its lowest since Nov. 4, and was last down 1% to $1,787.22 per ounce by 10:22 a.m. ET. U.S. gold futures dropped 1% to $1,788.40

Caught in gold’s slipstream, spot silver fell 3.2% to $23.40 per ounce, platinum dipped 4.2% to $968.95 and palladium shed 1.7% to $1,920.99

Heaping further pressure, the dollar index steadied after hitting a 16-month peak and U.S. Treasury yields firmed as news of Powell staying on as Fed chair increased expectations of a rate hike next year

“Gold has been in a panic selloff over the last 48 hours and I would blame most of it on rising 10-year Treasury yields. As the yield curve gets steeper, gold futures do not respond kindly,” said Phillip Streible, chief market strategist at Blue Line Futures in Chicago

Investors are betting Powell will step up the pace at which the central bank is normalizing monetary policy to better grapple with surging consumer prices

Gold is seen as a hedge against inflation, but rising Treasury yields have challenged that status as they translate into a higher opportunity cost of holding bullion

But it’s “too early to write off gold”, said Ross Norman, an independent analyst