As Treasury rates climb, gold prices end lower

Gold prices fell in range-bound trading on Monday, as rising Treasury rates bolstered the dollar and offset support from the Ukraine crisis, while palladium gained following London’s move to halt trade of the metal from Russia. By 0730 GMT, spot gold was down 0.2 percent at $1,942.85 per ounce, after reaching a more than one-week high of $1,949.32 earlier in the day. Gold futures in the United States were up 0.1 percent at $1,947.40 per ounce.

“Gold is still trading sideways, reflecting the opposing currents we’re seeing. There are still legitimate concerns about the geopolitical picture and the possibility of escalation in Ukraine “Tiger Brokers’ chief strategy officer, Michael McCarthy, stated.

“At the same time, a stronger US currency and the prospect of increasing interest rates throughout the world are dampening excitement for gold.” The US dollar index rose, boosted by 10-year Treasury rates reaching a more than three-year high and the likelihood of aggressive rate rises by the US Federal Reserve to tame surging inflation.

A stronger dollar makes gold less appealing to other currency holders, while higher interest rates and yields in the United States raise the opportunity cost of owning metal, which is also used as a hedge against inflationary pressures. Ukraine’s military forces readied for a new Russian attack on Monday, as huge explosions shook areas in the south and east, adding some backing to the safe-haven metal.

Palladium rose 3% to 2,499.19 after reaching a more than two-week high earlier in the session. “The rise in palladium prices is anticipated to hasten the transition from palladium to platinum for use in catalytic converters,” UBS analysts said in a report. On Friday, the auto-catalyst metal rose 8.6 percent after newly refined Russian platinum and palladium were barred from trading in London, the metals’ main trading center. Spot silver was up 0.1 percent to $24.77 per ounce, while platinum was up 0.7 percent to $981.88.