Gold Slides Amid Rising Rate Hike Bets
Gold prices are on track to end the week down about 2.4% due to rising US Treasury yields and increased expectations of Federal Reserve rate hikes.
The higher interest rates make holding gold less attractive, as it doesn't pay interest itself. When yields rise, investors face a 'what if I'd just owned bonds?' cost when considering bullion.
Reuters reports that sticky inflation and hawkish Fed messaging have contributed to the increase in yields, which is typically negative for gold's price due to its inability to generate interest income.
The pricing gap between spot and futures gold prices also indicates the impact of rising rates. Spot gold was trading at $4,274.18 an ounce as of 10:00 a.m. ET, while US gold futures were at $4,310.80, a roughly $36 premium.