Gold rally cools as bond yields, stocks recover; palladium rises

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Gold slipped on Wednesday due to an

uptick in risk appetite and US bond yields, while concerns

over a supply crunch that may follow sanctions on Russia kept

the price of auto-catalyst metal palladium near a seven-month

peak.

Spot gold was down 1.1% at $1,921.56 per ounce by

02:01 pm EST (1901 GMT).

US gold futures settled 1.1% lower at $1,922.30.

“We’re seeing a more of a technically motivated pullback as

there is a bit of a lesser need for safe havens. We’ve seen

equity markets stabilize,” said David Meger, director of metals

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trading at High Ridge Futures.

Wall Street gained and benchmark US 10-year Treasury

yields edged higher after Federal Reserve Chair Jerome Powell

signaled interest rate hikes could start this month despite

uncertainties surrounding the conflict in Ukraine.

Although gold is considered a safe investment during such

uncertainty, it is highly sensitive to rising US interest

rates, which increase the opportunity cost of holding bullion.

Analysts also said gold’s moves may have been led by a large

sell order, driving a roughly $20 drop around 5:27 am EST

(1027 GMT), but it was not clear who or what prompted the move.

Meanwhile, Commerzbank analyst Daniel Briesemann noted that

gold prices could go up despite a US rate hike in March as

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“everything is dependent on how the Russia-Ukraine conflict

develops.”

Palladium , used by automakers in catalytic converters

to curb emissions, was up 3.5% at $2,670.89, having hit its

highest level since July at $2,722.79 on Tuesday.

“Given the supply constraints that we are concerned about

due to the Russian sanctions, it is obvious that we would see

platinum and palladium prices rise,” High Ridge Futures’ Meger

added.

Western nations have ratcheted up sanctions on Russia, which

accounts for 40% of global palladium production, including

shutting out some Russian banks from the SWIFT global financial

network.

Spot silver fell 0.9% to $25.14, while platinum

rose 1.7% to $1,070.74.

(Reporting by Brijesh Patel in Bengaluru

Editing by Paul Simao)