Gold pares gains as higher US dollar, bond yields weigh

April 1 – Gold prices pared gains on Monday as the dollar and bond yields rose, after the bullion surged to a fresh record high on the growing expectation that the US Federal Reserve could deliver the first interest rate cut in June.

Spot gold was up 0.3% at USD 2,238.18 per ounce as of 1:50 p.m. EDT (1750 GMT) after hitting an all-time high of USD 2,265.49 earlier in the session.

US gold futures settled 0.9% higher at USD 2,236.5.

“The view out there is that the Fed will likely start cutting rates significantly before the time we reach the 2% (inflation) target based on what we’ve seen on the PCE data,” said Bart Melek, head of commodity strategies at TD Securities.

Data on Friday showed US prices moderated in February, keeping a June interest rate cut from the Fed on the table. Fed Chair Jerome Powell said February’s inflation data was “more along the lines of what we want to see.”

Gold tends to gain when interest rates are low, which reduces the opportunity cost of holding non-yielding bullion.

Growing rate cut expectations, safe-haven demand, and central bank purchases amid geopolitical tensions have boosted gold by more than 8% this year.

However, the dollar rose 0.5% to a more than four-month peak against rivals, making gold more expensive for other currency holders, while yields on 10-year Treasury notes also climbed.

“(Fed officials) will probably caution the market that they don’t necessarily have to get aggressive on cuts. There’s no guarantee that the US central bank will start cutting rates, and I think they’ll make that quite apparent and that may cause some reversals here,” Melek added.

Bullion prices have also hit record highs in other currencies, including the euro, the yuan, the Japanese yen, the Indian rupee, and the British pound sterling.

Spot silver was steady at USD 24.96 per ounce, platinum lost 0.7% to USD 901.50 and palladium slipped 2% to USD 994.00.

(Reporting by Anjana Anil and Brijesh Patel in Bengaluru; Editing by Nick Zieminski, Vijay Kishore, and Alan Barona)