Published On: Wed, Jan 19th, 2022

Gold prices slump as US rate hike looms – ‘Still adjusting to hawkish evolution’ | City & Business | Finance

Prices were around £1332.54 per troy ounce in the UK at 5am GMT after dropping from £1,361.20 on Friday, according to the Gold Bullion Company. Spot Gold marginally changed from $1,813.04 per ounce this morning, after falling to a one-week low of $1,805 an ounce on Tuesday.

Yesterday, the yellow metal dropped to the lowest US price since December 11 as Fed Fund Futures propelled US Treasury yields and the US Dollar Index (DXY).

Following the drop in spot gold, DailyFX currency strategist Ilya Spivak explained the current trend.

She said: “We seem to be coiling up for some kind of breakout, likely on the downside, as the handoff occurs where inflation expectations start to slow down while nominal rates shift up around expectations for central bank action and that starts to really bid up real yields.”

Spot Silver fell 0.3 percent to $23.38 an ounce, platinum slipped 0.9 percent to $972.11, and palladium was down 0.4 percent at $1,890.18.

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The 10-year US Treasury yield jumped to its highest point in two years on Tuesday, soaring at around 1.87 percent.

By around 4 PM ET the yield on the benchmark 10-year Treasury note was trading 10.5 basis points higher at 1.877 percent.

This marks its highest level since January 2020.

James Athey, senior investment manager at Aberdeen Standard Investments, told CNBC the unexpected spike can’t be explained by a single piece of news.

He said: “The reality is that the market is still adjusting to the Fed’s ongoing hawkish evolution.”

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