Gold was up on Wednesday morning in Asia given the ongoing pressure from U.S. inflation. However, rising U.S. treasuries yield and growing expectations on U.S. Federal Reserve interest rate hikes kept the gains in check.
Gold futures inched up 0.03% to $1,828.45 by 11:45 PM ET (4:45 AM GMT). The dollar, which normally moves inversely to gold, edged down on Wednesday.
U.S. 10-year Treasury yield jumped as 1.97% on Tuesday, a leap not seen since Nov. 2019.
Investors now await inflation data due on Thursday for more clues on the Fed’s timeline on interest rate hikes. Markets are now pricing in a one-in-three chance that the Fed will hike interest rates in March 2022.
San Francisco Fed President Mary Daly said on Tuesday that U.S. inflation might even go higher before getting better.
“Expectations of higher inflation are largely driving the move, as hawkish Fed’s stance is largely priced-in,” ANZ commodities analyst Soni Kumari told Reuters.
“The focus is on real rates, and although they are higher, they remain negative … so there is a bit of a push-and-pull here, where on the one hand, real rates are going up, which is gold-negative, but they still remain less attractive than gold,” DailyFX currency strategist Ilya Spivak told Reuters.
Across the Atlantic, European Central Bank’s president Christine Lagarde said on Monday that there is no need for extensive tightening as inflation is set to fall back and could stabilize, tapping down rising expectations of aggressive interest rate hikes.
In other metals, silver jumped 0.4% while platinum and palladium were down 0.2%.