Treasury Yields Dampen Gold's Appeal Ahead of US Interest Rate Hike Bets

Gold prices have edged higher on Friday but are still headed for a weekly loss due to rising concerns about sticky inflation, hawkish signals from Federal Reserve policymakers, and increasing US Treasury yields. Spot gold was up 0.1% at $4,282.98 per ounce by 2:05 p.m. ET (1805 GMT), while US gold futures settled 0.5% higher at $4,321.20.

According to Han Tan, chief market analyst at Bybit, the unrelenting surge in Treasury yields has set gold on course for its 4th weekly decline over the past five weeks. The US benchmark 10-year bond yield hit a fresh 19-year high, increasing the opportunity cost of holding non-yielding bullion.

Gold is traditionally considered an inflation hedge and a safe investment during geopolitical uncertainty, but 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.