Gold stabilized today, Friday, ahead of U.S. job data set to be released today, but the yellow metal is on track to record its largest weekly decline since late November, pressured by rising bond yields as traders brace for an earlier interest rate hike by the Federal Reserve. Spot gold rose by 0.1% to $1,790.90 per ounce, after declining for two sessions, trimming its weekly drop to about 2%. U.S. gold futures increased by 0.2% to $1,792.60.
Kyle Rodda, an analyst at IG Markets, stated, "It is clear that the Federal Reserve's potential attempt to rein in rising inflation is boosting yields," adding that this is causing some loss of demand for the precious metal. U.S. ten-year Treasury yields surged to their highest level since March 2021, increasing the opportunity cost of holding gold.
Gold is seen as a hedge against inflation, but it is sensitive to rising U.S. interest rates, which increase the opportunity cost for holders of the non-yielding yellow metal. Among other precious metals, silver saw little change in spot transactions, remaining at $22.14 per ounce. Platinum rose by 0.2% to $966.50 per ounce, while palladium fell by 0.6% to $1,872.02 per ounce.
