Gold Regains Some Ground as U.S. Yields, Dollar Takes Breather

GOLD - NEW YORK. Gold bounced off a 2-1/2-year low on Tuesday as a slight pullback in the dollar and U.S. Treasury yields helped tide over some pressure from prospects of more aggressive U.S. rate hikes.

Spot gold was up 0.7% at $1,632.83 per ounce as of 0939 GMT, after falling to its lowest since April 2020 at $1,620.20 in the previous session.

U.S. gold futures rose 0.4% to $1,640.50.

"After an explosive start of Monday, U.S. yields and the dollar are slightly paring gains, which is helping to ease the downward pressure on gold prices," said Craig Erlam, senior market analyst at OANDA.

"The yellow metal remains incredibly sensitive to both and we're seeing a lot of volatility right now as markets increasingly price in much higher rates."

The dollar index eased off a two-decade peak scaled in the previous session, making gold less expensive for other currency holders.

The benchmark 10-year Treasury yield also retreated from a 12-year peak, reducing the opportunity cost of holding non-interest bearing gold.

The Federal Reserve has aggressively raised interest rates since March and has signaled more increases are to come, stoking concerns of a global recession and triggering a sell-off in equity markets.

Gold, traditionally seen as a safe-haven asset, has failed to benefit from the recent rout in equities as investors flocked to the safety of the U.S. currency amid hawkish stance on rates by the Fed.

"Its (gold's) status as a haven asset in times of economic distress has failed to stem the flow of selling," analysts at ANZ said in a note.

Indicative of sentiment, holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, have fallen to their lowest since March 2020.

Elsewhere, spot silver gained 1.2% to $18.56 per ounce, platinum rose 0.5% to $856.26, while palladium eased 0.2% to $2,041.49.