Gold falls as dollar rises, bond yields rise to multi-year highs

Gold prices fell on Wednesday as the dollar and US Treasury yields rose to multi-year highs after hawkish comments from Federal Reserve officials boosted expectations of a sharp interest rate hike.

By 0404 GMT, spot gold fell 0.3 percent to $1,624.12 an ounce, close to the two-and-a-half year low of $1,620.20 it touched earlier in the week.

US gold futures fell 0.3 percent to $1,631.60.

“There are expectations for higher rate hikes…a strong US dollar and higher real interest rates…None of that bodes well for gold,” said Ilya Spivak, a currency strategist at DailyFX.

The dollar index rose to a new peak, the highest in 20 years, making gold priced in the US currency more expensive for buyers of other currencies.

Ten-year US Treasury yields rose to 4 percent for the first time since 2010.

Charles Evans, Federal Reserve Chairman in Chicago, James Bullard in St. Louis, and Neil Kashkari in Minneapolis reiterated the US central bank’s pledge to focus on tackling high inflation.

Evans said the Fed would need to raise interest rates from 4.50 percent to 4.75 percent.

Gold is considered a hedge against inflation and economic uncertainty, but raising interest rates has reduced the attractiveness of the non-yielding yellow metal and pushed the dollar to its highest levels in several years.

As for other precious metals, silver fell in spot transactions to its lowest level in three weeks, and recorded in the latest trading, a decline of 1.4 percent to $ 18.17 an ounce.

Platinum fell 0.7 percent to $842.52 after hitting its lowest level since Sept. 5.

Palladium fell 1.2 percent to $2,061.31.