Gold Down, U.S. Treasury Yields Up as Investors Await Interest Rate Hike By

© Reuters.

By Gina Lee

– Gold was down on Monday morning in Asia. U.S. Treasury yields rose over expectations of a U.S. interest rate hike, while hopes for an end to the conflict in Ukraine dented the safe-haven yellow metal further.

Gold futures were down 0.25% to $1980.10 by 12:49 AM ET (4:49 AM GMT).

"One key reason is surging treasury yields. Also, the market seems to be pricing in on the U.S. Federal Reserve meeting on Wednesday at which it may start to kick off the tightening cycle. So this is a negative factor for gold," DailyFX strategist Margaret Yang told Reuters.

"Given the fact that both sides are willing to talk, I think the worst of the Ukraine crisis is probably behind us. It's unlikely that gold price will surge beyond the previous high from last week or reach a record high anytime soon."

U.S. Deputy Secretary of State Wendy Sherman said on Sunday that there could be signs that Russia is willing to begin substantial negotiations to end the conflict, even as the fighting continues.

Benchmark U.S. 10-year Treasury yields climbed to a near one-month high, with the Fed widely expected to hike interest rates when it hands down its policy decision later in the week.

In Asia Pacific, the Bank of Japan will hand down its policy decision on Friday, while the Reserve Bank of Australia will release the minutes from its latest meeting on Tuesday.

The Bank of England will also hand down its policy decision on Thursday.

In other precious metals, palladium tumbled 3.9% to $2,705.18 per ounce. It hit a record high of $3,440.76 during the previous week due as fears of supply disruptions from top producer Russia continue.

Russian mining giant Nornickel managed to secure alternative routes for its palladium deliveries, but logistics issues remain. Silver fell 0.9% and platinum fell 1.9%.

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