Gold was steady after posting its biggest drop in six weeks as bond yields surged, with investors bracing for monetary policy tightening in 2022.
Ten-year Treasuries had the worst start to a year in more than a decade, with yields rising 12 basis points on Monday, the largest first-day jump since 2009, according to Bloomberg data. Meanwhile, the S&P 500 Index closed at a record high on risk-on sentiment.
Bullion fell last year in its biggest annual decline since 2015 as central banks started to dial back pandemic-era stimulus to fight inflation. Traders are also monitoring the risks posed by the omicron virus variant and will focus this week on the releases of minutes from the Federal Reserve’s latest meeting and the US nonfarm payrolls data.
Prices of the precious metal are not expected to free-fall as real rates and yields are set to “remain at a historically low level, very close to zero until the coast is all clear from the strains of Covid-19”, said Avtar Sandu, a senior manager of commodities at Phillip Futures Pte.
Bullion is likely to hold for now “despite expectations that action by the Fed to rein-in inflation and reduce their bloated balance sheet would not benefit gold as much as other assets”, he added.
Spot gold rose 0.1 percent to $1,803.86 an ounce at 12.10pm in Singapore, after dropping 1.5 percent Monday, the most since November 22. The Bloomberg Dollar Spot Index was flat after adding 0.5 percent in the previous session. Silver fell, platinum was steady, while palladium advanced.
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