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Gold Down, Rising U.S. Dollar and Treasury Yields Dent Safe-Haven Appeal

·2 min read

By Gina Lee

Investing.com – Gold was down on Wednesday morning in Asia, easing as the dollar was boosted by hawkish comments from U.S. Federal Reserve officials, and U.S. Treasury yields hit multi-year highs.

Gold futures were down 0.23% to $1,923 by 11:56 PM ET (3:56 AM GMT). The dollar, which usually moves inversely to gold, edged up on Wednesday to a near two-year high as the Fed works towards quickly reducing its bloated balance sheet.

Kansas City Fed President Esther George said she was open to interest rate hikes of half a percentage point. For her part, Fed Governor Lael Brainard said she expected a combination of rate hikes and a rapid balance sheet runoff to bring U.S. monetary policy to a "more neutral position" later in 2022, with further tightening to follow as needed.

Other Fed policymakers will also speak throughout the week, starting with Philadelphia Fed President Patrick Harker later in the day, while St. Louis Fed President James Bullard, Atlanta Fed President Raphael Bostic, and Chicago Fed President Charles Evans will speak at separate events on Thursday.

Investors also await the minutes from the Fed’s latest meeting, which will be released later in the day. The minutes could provide clues to the pace of Fed interest rate hikes and quantitative tightening.

The Reserve Bank of India will also hand down its policy decision on Friday.

U.S. Treasury yields also hit multi-year records during the session, with the focus firmly on the Fed's plan for unwinding its balance sheet. However, longer-term yields are moving more quickly and have partly reversed some of the U.S. curve’s recent inversions.

Meanwhile, the U.S. and its allies discussed further sanctions on Russia on Wednesday. The latest sanctions since Russia’s invasion of Ukraine on Feb. 24 are due to reports of civilian killings in northern Ukraine, described as "war crimes” by Ukrainian President Volodymyr Zelenskiy.

In other precious metals, silver inched down 0.1% and platinum was down 0.3%, while palladium was flat at $2,237.05.

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