Gold is falling with an imminent hike in the US interest rate

Gold prices fell on Wednesday with the increase in the yield on US Treasury bonds and an imminent hike in the US interest rate, which negatively affected the demand for the precious metal.

Spot gold prices fell 0.1 percent to $865.31 an ounce by 0040 GMT. US gold futures fell 0.2 percent to $1,866.10 an ounce.

The yield on US 10-year Treasury bonds rose on Wednesday, after falling in the previous session, ahead of the Federal Reserve’s decision to raise interest rates by 50 basis points to curb rising inflation.

The Federal Open Market Committee of the US Federal Reserve will announce its decision on Wednesday.

Although gold is considered a hedge against inflation, raising the short-term interest rate and increasing the yield on Treasury bonds raises the opportunity cost of holding non-interest-bearing gold.

As for other precious metals, silver fell in spot transactions 0.1 percent to $22.54 an ounce. Platinum rose 0.1 percent to $962.60 an ounce. Palladium fell 0.1 percent to $2,252.51 an ounce.