(Reuters) – Gold prices fell on Tuesday as U.S. Treasury yields hit fresh multi-year highs following Federal Reserve chair Jerome Powell’s aggressive inflation stance, while safe-haven bullion remained underpinned by escalation in the Ukraine crisis.
FUNDAMENTALS
* Spot gold was down 0.2% at $1,931.84 per ounce by 0105 GMT. U.S. gold futures were flat at $1,930.20.
* Powell indicated that the U.S. central bank would raise interest rates by bigger-than-usual amounts if necessary to bring down inflation that was running “much too high.”
* The yield on the benchmark 10-year Treasury note jumped above 2.3% for the first time since May 2019, while a closely watched gap between rates for two- and 10-year Treasury notes flattened further, a potential sign of an economic downturn. [US/]
* Sharp moves in the U.S. Treasury market are increasingly pointing to the risk of an approaching recession, with markets doubting the Fed’s plan to engineer a “soft landing” for the economy as it hikes interest rates to fight inflation, market experts said.
* Higher yields and interest rates tend to increase the opportunity cost of holding non-interest paying gold.
* Slowing gold’s slide, Ukraine said on Monday it would not obey ultimatums from Russia after Moscow demanded it stop defending besieged Mariupol, intensifying the conflict.
* Meanwhile, European Union governments will consider whether to impose an oil embargo on Russia over its invasion of Ukraine when they gather this week with U.S. President Joe Biden for a series of summits.
* Palladium, used by automakers in catalytic converters to curb emissions, fell 0.5% to $2,571.64 per ounce.
* The auto-catalyst metal hit a record high of $3,440.76 on March 7, driven by fears of supply disruptions from top producer Russia.
* Spot silver was down 0.2% to $25.15 per ounce, platinum shed 0.3% to $1,033.99.
(Reporting by Asha Sistla in Bengaluru; editing by Uttaresh.V)
