International gold prices fall as inflation data continues to pressure the Federal Reserve
Gold prices fell as US Treasury yields rose overnight on strong inflation data, but the outlook for gold remains bullish after talks between Russia and Ukraine yielded no progress. At 16:04 Beijing time, spot gold fell 0.32% to $1990.06 an ounce; the COMEX gold futures contract fell 0.29% to $1994.4 an ounce; and the US dollar index rose 0.11% to 98.633.
Time:
2022-03-11 20:05
International, Friday, March 11 Gold price (1981.63, -18.77 , -0.94% declined, with US Treasury yields rising overnight on strong inflation data, but the outlook for gold remains bullish after talks between Russia and Ukraine yielded no progress.
16:04 Beijing time, Spot gold fell 0.32% to $1990.06 an ounce; the main COMEX gold futures contract fell 0.29% to $1994.4 an ounce; US Dollar Index rose 0.11% to 98.633.
“To a large extent, this will again be a war-driven trade. But in the absence of any escalation of the war, the Fed will dampen market sentiment, and the Fed is expected to be more hawkish than the market is currently pricing in,” said Stephen Innes, managing partner at SPI Asset Management.
The 10-year Treasury yield broke above 2% on Thursday, March 10, for the first time in two weeks, after the US February CPI rose 7.9% year-on-year, the highest level in 40 years, confirming rapid price increases and solidifying expectations for a Fed rate hike next week, while the European Central Bank is turning hawkish.
“The CPI data was not far from expectations, and it will be even higher in the next one or two months as some commodity prices continue to rise,” said Paul Nolte, portfolio manager at Kingsview Asset Management.
Gold is highly sensitive to rising US interest rates, as rising rates increase the opportunity cost of holding non-interest-bearing gold, but investors have flocked to safe-haven assets due to the Ukraine crisis, leading to a surge in gold prices, with a cumulative increase of about 5.4% in the past two weeks.
EU leaders held a summit on Thursday and agreed on a common response to the war in Ukraine, but differed on the strength of economic sanctions, how quickly to reduce Russian energy imports, and whether to allow Ukraine to join the EU quickly.
However, German Chancellor Scholz did not comment on whether the EU should ban imports of Russian oil, which would also require the agreement of all member states, and Berlin has so far ruled out this possibility. Germany relies on Russia for about one-third of its natural gas and crude oil (107.91, 1.89, 1.78% demand.
Concerns about prices and imported inflation have prompted central banks in Asia-Pacific countries such as New Zealand, South Korea, and Singapore to embark on aggressive policy tightening cycles. However, for most other central banks, the fragile post-pandemic economic recovery needs to be protected, which is likely to make policy considerations more complex.
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