Gold falls with an imminent rates hike

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

Spot gold prices fell 0.1% to $865.31 an ounce by 00:40 GMT.

US gold futures fell 0.2% to $1,866.10 an ounce.

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

The Federal Open Market Committee of the US Central Bank 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% to $22.54 an ounce, and platinum rose 0.1% to $962.60, while palladium fell 0.1% to $2252.51 an ounce.