Gold Slides on Inflation Worries and Rising Treasury Yields
Gold prices slipped lower on Friday due to concerns about sticky inflation and higher US Treasury yields. Spot gold was down 0.1% at $4,274.18 per ounce by 10:00 a.m. ET (1400 GMT), with prices poised for a weekly loss of around 2.4%. Han Tan, chief market analyst at Bybit, noted that the surge in Treasury yields has set gold on course for its fourth weekly decline over the past five weeks.
The rise in US Treasury yields increased the opportunity cost of holding non-yielding bullion, making gold less attractive to investors. This comes as the Federal Reserve raised interest rates by a quarter-point last week and signaled more hikes ahead. Traders are pricing in a 64% chance of an October hike and a 93% chance of one in December, according to CME's FedWatch Tool.
Gold is traditionally considered an inflation hedge and a safe investment during geopolitical uncertainty. However, higher interest rates have tarnished its attractiveness as investors turn to yield-bearing assets. Bullion has fallen about 19% from its February 27 session high.