Gold pinned near 2-1/2-year low as stronger dollar, yields weigh

Gold prices were at their lowest level in 2-1/2 years on Monday, weighed down by a strong dollar and U.S. Treasury

yields amid the U.S. Federal Reserve’s hawkish stance on rate hikes.

Spot gold was up .2% at $1,646.29 per ounce, after dropping as much as 1% earlier to its lowest since April 2020, at $1,626.41, in the Asia session.

“We’ve got dollar strength and an increase in the U.S. Treasury yields, which typically would push gold lower. However, broadly speaking, gold isn’t doing too badly in the scheme of things,” independent analyst Ross Norman said

The dollar index rose to a fresh high since 2002 against its rivals, boosted by a plunge in British sterling, making gold more expensive for other currency holders

Gold prices have fallen more than $400, or over 20%, since scaling above the key $2,000 per ounce level in March as major central banks raised interest rates sharply to tame soaring inflation

Last week, the U.S. central bank hiked interest rates by 75 basis points and signaled more increases are to come

Higher U.S. interest rates dull the zero-yielding bullion’s appeal, while bolstering the dollar and bond yields

Benchmark U.S. Treasury yields firmed near their highest level since 2011, increasing the opportunity cost of holding non-interest bearing gold

“Last week’s series of interest rate hikes by central banks had put gold under heavy near-term pressure and with no prospect of the banks changing course in the coming months, the medium-term outlook also looks gloomy for the precious metal,” Kinesis Money analyst Rupert Rowling said in a note

Elsewhere, spot silver fell 0.1% to $18.82 per ounce, after touching its lowest in more than two weeks earlier in the session

Platinum rose 0.7% to $859.87 per ounce and palladium fell 0.8% to $2,050.90