Gold Declines 1% as The Dollar Rises

Spot gold (XAU=) was under 1.2% at $1,934.61 per ounce, as of 0651 GMT. U.S. gold futures (GCv1) dropped 1% at $1,935.00.

OANDA senior analyst Jeffrey Halley stated that gold is falling after its rally was hindered on Friday. The U.S. dollar strengthened this morning in Asia.

The dollar index boosted to its highest in more than one week, making gold more costly for other currency holders.

The dollar has profited from its status as a haven. The war in Ukraine has driven expectations that the U.S. Federal Reserve will hike interest rates.

Supported by expectations of monetary tightening by the U.S. Federal Reserve, yields on the U.S. 10-year Treasury note (US10YT=RR) firmed near multi-year highs.

According to Michael Langford, director at corporate advisory AirGuide, if U.S. March jobs data reaches around 500,000 or higher, he sees an increased chance for gold to fall materially in the short term. This will support the Fed raising rates faster.

The Fed raised borrowing expenses for the first time in three years last week, and traders are pricing in a chance of a 50-basis-points rate hike by the U.S. central bank in May.

Ukrainian Talks Expected

Higher yields and interest rates raise the opportunity cost of holding non-yielding bullion.

With peace talks between Russia and Ukraine set to take place in Turkey this week, Ukrainian President Volodymyr Zelensky insisted on his country’s territorial integrity.

Holdings of the world’s largest gold-backed exchange-traded fund, SPDR Gold Trust, increased to 1,093.18 tonnes on Friday, their most elevated after late-February 2021.

Spot silver (XAG=) slid 1.7% to $25.08 per ounce and platinum (XPT=) declined 0.8% to $994.19, while palladium (XPD=) was flat at $2,335.17.