Gold Fell on Treasury Yields, Cautious Peace Hopes

Gold Fell on Treasury Yields, Cautious Peace Hopes

Gold fell on Treasury yields early Monday ahead of this week’s anticipated interest rate hike by the Federal Reserve. The yellow metal and palladium were also dinged by cautious peace hopes for Ukraine.

Hope for a peace deal between Russia and Ukraine also dampened the yellow metal’s safe-haven appeal, as talks between the two warring nations were set to begin Monday via videoconference. A Ukrainian presidential adviser, Mykhailo Podoliak, confirmed the talks on Twitter and said separately that they were starting to be more constructive.

Front-month gold futures rose 0.9% last week to $1,985.00 an ounce on Comex, though it slipped 0.8% Friday. Gold advanced 5.8% last month after dropping 1.8% in January, its worst month since September. It retreated 3.5% in 2021. Currently, the April contract is down $26.60 (-1.34%) an ounce to $1,958.40 and the DG spot price is $1,958.50.

Fed officials have clearly indicated that they will begin tightening monetary policy at this week’s meeting, with their decision scheduled for Wednesday afternoon. The meeting comes amid the sharpest increase in U.S. monthly inflation in 40 years in February, according to data released last week by the Bureau of Labor Statistics. The Russia-Ukraine conflict added to already-high prices.

Higher interest rates are typically bearish for gold because other assets become more attractive to investors. But the yellow metal is a traditional hedge against inflation.

The conflict between Russia and Ukraine continued to underpin prices, however, particularly after reports Sunday that Russia asked China to provide it with military equipment and economic assistance as it deals with widespread sanctions imposed by Western powers to counter its aggression. U.S. officials, which described the request, declined to discuss the Chinese reaction.

Front-month silver futures advanced 1.4% last week to $26.16 an ounce on Comex, though it fell 0.4% Friday. Silver surged 8.8% in February after dropping 4.1% in January. It fell 12% in 2021. Silver prices are tied to industrial demand. The May contract is down $0.865 (-3.31%) an ounce to $25.295 and the DG spot price is $25.12.

Spot palladium retreated 6.4% last week to $2,808.00 an ounce, after falling 6.2% Friday, though it touched a record $3,440.76 early in the week. The metal surged 25% the prior week. Russia produces about 40% of the world’s palladium, and the metal’s main use is in catalytic converters for gasoline-powered vehicles. There are already vehicle shortages and price increases for automobiles, and Russia’s Nornickel is the world’s largest supplier of palladium. Palladium gained 5.3% last month after rallying 24% in January. It retreated 22% in 2021. Currently, the DG spot price is down $412.30 an ounce to $2,409.50.

Spot platinum decreased 3.6% last week to $1,080.70 an ounce after dropping 0.2% Friday. The metal advanced 1.7% in February after rising 5.7% in January. It lost 9.4% last year. The DG spot price is currently down $44.80 an ounce to $1,036.80.


Disclaimer: This editorial has been prepared by Dillon Gage Metals for information and thought-provoking purposes only and does not purport to predict or forecast actual results. This editorial opinion is not to be construed as investment advice or as a recommendation regarding any particular security, commodity or course of action. Opinions expressed herein cannot be attributable to Dillon Gage. Reasonable people may disagree about the events discussed or opinions expressed herein. In the event any of the assumptions used herein do not come to fruition, results are likely to vary substantially. It is not a solicitation or advice to make any exchange in commodities, securities or other financial instruments. No part of this editorial may be reproduced in any manner, in whole or in part, without the prior written permission of Dillon Gage Metals. Dillon Gage Metals shall not have any liability for any damages of any kind whatsoever relating to this editorial. You should consult your advisers with respect to these areas. By posting this editorial, you acknowledge, understand and accept this disclaimer.