Gold prices slip further below $1,800 as rate hike fears weigh

By Ambar Warrick

Investing.com-- Gold prices fell further away from key levels on Tuesday as concerns over rising interest rates and a potential recession in 2023 saw investors pivot into the dollar and Treasury yields, with the broader metal market also coming under pressure.

The greenback traded steady against a basket of currencies this week after recovering sharply from a five-month low hit earlier, while 10-year U.S. Treasury yields firmed for a third consecutive session.

This pressured bullion prices with a clear lack of bids, as gold largely relinquished its safe haven status to the greenback this year. The yellow metal is trading slightly lower for 2022, and is also down substantially from peaks hit during the initial days of the Russia-Ukraine conflict.

Spot gold fell 0.1% to $1,785.46 an ounce, while gold futures fell 0.2% to $1,794.60 an ounce by 19:25 ET (00:25 GMT).

The latest selling pressure on gold comes from a series of hawkish central bank comments last week, which heralded a continued rise in interest rates in the coming year. The trend spells more pressure on gold and other metals, as rising rates battered the metals market by driving up the opportunity cost of holding non-yielding assets.

Investors are now also concerned over a potential recession in 2023, driven chiefly by high inflation and rising interest rates.

Focus on slowing economic growth is also expected to define the last two trading weeks of 2022 amid a dearth of other cues. Trading volumes are also expected to be diminished by a series of market holidays.

Other precious metals also retreated on Tuesday.

Among industrial metals, copper prices were steadier than their peers amid continued bets that an economic recovery in China will fuel copper demand.

Copper futures rose 0.1% to $3.7637 a pound.

But the red metal’s outlook remains clouded by uncertainty over a global recession, with weakening economic activity across the globe likely to offset a demand recovery in major importer China.

Still, tightening copper supply, due to political unrest in top producers Chile and Peru, is likely to help support prices in the coming months.