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AGE Daily Gold Update presents a recap on today's action in the precious metals markets. View archives.


1/18/2022: Gold slips on yields, dollar

Source: Bill Musgrave, American Gold Exchange

Austin — Gold slipped 0.2% to close above $1,812 despite weak US data and higher oil prices as sharp gains in Treasury yields and the dollar weighed on alternative stores of value.

Benchmark 10-year Treasury yields jumped to 1.87%, the highest level in two years, on bond-market bets that the Federal Reserve will tighten monetary policy even faster than they’ve indicated. The 2-year Treasury yield rose above 1% for the first time in two years, suggesting a rapid climb in rates.

Bloomberg data shows traders are now pricing in four rate hikes in 2022, up from the three previously forecast, as the central bank plays catch-up in fighting the strongest inflation in 40 years.

While gold is widely considered a global hedge against inflation, higher yields create headwinds for the metal by increasing the opportunity cost for holding it instead of bonds as a safe-haven asset.

The dollar tracked higher with yields, adding 0.5% against major rivals after the Bank of Japan elected to maintain its ultra-loose monetary policy at its meeting this week. A rising dollar can weigh on gold and other commodities by making them pricier overseas.

Backstopping gold, oil prices jumped 2.4% to a 7-year high after Yemen’s Houthi rebels attacked the United Arab Emirates with drones and missiles, sparking concerns about possible supply disruptions in the Middle East. Gold often trades in sympathy with oil as a hedge against energy-related inflation.

Gold surged above $1,822 in intraday trading after New York’s Empire State survey of business condition fell into negative this month, its first contraction since June 2020 during the heart of the pandemic. Omicron and ongoing supply-chain constraints were cited as primary causes.

The other precious metals were higher, with silver rallying 2.5% while platinum and palladium added 1.5% and 1.4%, respectively.

At the Comex close: February gold slipped $4.10 to $1,812.40; March silver climbed 57 cents to $23.49; April platinum rose $14.90 to $979.50; and March palladium picked up $26.40 to $1,904.60 an ounce.

  

Metal Ask      Change
Gold $2,235.81           Price Change Down Arrow $-2.68
Silver $25.08           Price Change Down Arrow $-0.06
Platinum $918.61           Price Change Down Arrow $-0.56
Palladium $1,051.50           Price Change Up Arrow $0.26
In US Dollars