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Highlights
- Gold prices slipped as the dollar index strengthened to its highest in more than one week.
- The benchmark 10-year bond yields hit their highest level since April 2019 on Monday.
- Like gold, palladium prices also tumbled to US$2,200 per tonne on Monday.
Gold prices continued their downward rally on Tuesday too. After falling 0.97% on Monday, the prices further rolled over 0.90% on Tuesday and last traded at US$1,922.80 per ounce as the US dollar held firm at a three-week high and yields climbed. At the same time, investors abstained from big bets as both Russia and Ukraine are set for their first peace talks in Istanbul in over two weeks.
Earlier, gold prices were dipped as the dollar index strengthened to its highest in more than one week, making the bullion more expensive for other currency holders. The dollar has benefited from its status as a safe haven and the ongoing conflict in Ukraine has driven expectations that the US Federal Reserve will hike interest rates.
On Monday, benchmark 10-year bond yields hit their highest level since April 2019, lifted by bets of aggressive interest rate hikes by the Federal Reserve to combat soaring inflation.
Also watch: Shining In Times Of Crisis: How Gold Prices Reacted During Wars?
Although gold is considered a good hedge against inflation, increasing U.S. interest rates boost the opportunity cost of holding non-yielding bullion.
Gold’s dimming golden rally
The glittering yellow metal has recorded a staggering rally in the last one month with prices surpassing the all-time-high level of US$2050/oz on 8 March 2022, providing investors a mind-blowing return of 25% between March 2020 and March 2022. The prices of one-month COMEX gold gained 1.48% in the last week.
Source: © Baloncici | Megapixl.com
Investors also reduced bullion holdings as Ukraine and Russia were set for their first peace talks.
April delivery gold futures last traded at US$1,920.80 per ounce, down 0.95% as of Tuesday at 5:33 PM AEDT. The prices are up 10.54% in the last one year.
Good Read: Shining in times of crisis: How gold prices reacted during major wars
Palladium’s downward movement
Like gold, palladium prices also tumbled to near US$2,200 per tonne on Monday, a level not seen in nine weeks amid easing fears of supply disruptions. Despite Western nations haven’t sanctioned Russian platinum group metal exports but the prices remained buoyed by fears of supply shortage.
Palladium prices tumbled nearly 8% on Monday while it has gained 1.72% on Tuesday at 5:33PM AEDT. The metal has lost more than 30% since its record highs on 7 March 2022.
RELATED ARTICLE: FME, DEV: Why these 2 ASX palladium stocks surged higher today
Bottom Line
The prices of gold and palladium tumbled on Tuesday on prospects of easing tension between Russia and Ukraine. The prices were additionally weighted as the US dollar held firm at a three-week high and yields climbed.
