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Gold futures on Tuesday were headed lower as the U.S. dollar and yields for government debt headed higher, ahead of the start of a two-day meeting of the Federal Reserve, which could influence bullion trade when it concludes Wednesday.
The yellow metal has drawn safe-haven bids amid wild swings in values for stocks and geopolitical tensions in Europe, where there are fears about the annexation of Ukraine by Russia.
Investors also have grown anxious about how rapidly the Fed will act to combat high inflation by raising interest rates and reducing its nearly $9 trillion balance sheet.
While the S&P 500 index so far is on track for its worst start to a year on record gold has been buoyant, up 0.3% this week and gaining 0.5% so far in 2022, FactSet data show, though higher interest rates may undercut support for gold.
“However, investors should not forget that increased equity market volatility, if it lasts long enough, at some point triggers a capitulation of gold buyers,” wrote Alex Kuptsikevich, a senior financial analyst at FxPro, in a daily note.
On Tuesday, February gold
GCG22,
GC00,
was down $3.90, or 0.2%, lower at $1,837.90 an ounce, following a 0.5% climb on Monday.
Meanwhile, gold’s sister metal. silver for March delivery
SIH22,
was trading 10 cents, or 0.4%, lower at $23.71 an ounce, after a 2.1% drop on Monday.
The moves came as the yield for the 10-year Treasury note
TMUBMUSD10Y,
was up 5 basis points at around 1.78%, while a gauge of the U.S. dollar, the ICE U.S. Dollar Index
DXY,
was climbing 0.4%.
