Gold eases from one-month peak as dollar, equities climb

Gold prices on Wednesday retreated from a more than one-month peak hit in the last session, as a stronger U.S. dollar and increased appetite for riskier assets depressed sentiment

Spot gold fell 0.6% to $1,795.00 per ounce, while U.S. gold futures dropped 0.9% to $1,794.70

“The main market driver is the decline that was seen on the euro-dollar… the dollar is strengthening and this is not the best thing for gold,” Carlo Alberto De Casa, a market analyst for Kinesis, said

The dollar rose 0.1%, after hitting its highest since Dec. 22 earlier in the session, increasing gold’s cost for buyers holding other currencies, while European shares rose for a third session, hovering near an all-time high hit last month

Investors are waiting to see if the U.S. Federal Reserve will hike interest rates three times in the coming year, De Casa said, adding that central bank policies will also be a market driver in 2022

Higher rates increase bond yields, making non-yielding bullion less attractive

Gold prices are on track for their biggest yearly decline since 2015, having fallen nearly 5% so far

“Gold’s annual decline this year was largely due to the surging U.S. dollar, propelled by bets that inflation would force the Fed to lean hawkish,” Han Tan, chief market analyst at Exinity, said

Bond markets remain circumspect and have yet to be convinced that the Fed can deliver its hawkish pivot without derailing the U.S. economic recovery, Tan said, adding that if Treasury yields rise as expected in 2022, that should erode the appeal of bullion