Gold stabilized after a two-day decline as traders watched a surging dollar and a surge in Treasury yields amid expectations of further monetary tightening by the Federal Reserve.
Spot gold was little changed at $1,701.59 an ounce at 12:57 p.m. London, after falling 0.6% in the previous two days. The Bloomberg Dollar Spot Index hit a record high. Silver and palladium rose, while platinum was stable.
Bullion had fallen below $1,700 an ounce as central banks broadly raised interest rates to fight inflation, dampening the appeal of the non-interest-bearing asset.
“Gold is back in the danger zone as global bond yields soar,” said Edward Moya, senior market analyst at Oanda Corp. It could get ugly quickly if gold breaks below the $1690 level as there isn’t much support until $1650.
Traders will also be watching the European Central Bank’s policy decision on Thursday. Money markets reduced expectations for a rate hike amid growing concerns about the health of the region’s economy.
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