Gold holds decline as bond yields surge before Fed meeting

Gold holds decline as bond yields surge before Fed meeting

Gold held a drop after bond yields climbed ahead of a key Federal Reserve meeting where policy makers are set to raise interest rates. Bullion has eased after rallying to within $5 of a record last week as Russia’s invasion of Ukraine and accelerating inflation boosted demand for the haven asset. The crisis has led to sustained inflows into bullion-backed exchange-traded funds, driving total holdings to the highest level in a year, according to initial data compiled by Months of speculation about a new wave of interest-rate hikes looks to be coming to a head on Wednesday, when the US central bank is expected to begin tightening to rein in decades-high inflation, which is being exacerbated by surging commodity prices. Markets now indicate they expect about seven quarter-point Fed rate hikes in 2022. The 10-year Treasury yield extended gains after rising to its highest level since July 2019 on Monday, which reduced the appeal of non-interest-bearing gold. “Price action will depend on Fed commentary in the short-term, but I wouldn’t be surprised to see gold rally on the day of the Fed hike, as long as the commentary isn’t too hawkish,” said John Feeney, business development manager at Sydney-based bullion