Gold reversed course and rose on Wednesday as falling US Treasury yields helped offset pressure from a firmer dollar and plans by the Federal Reserve to hike interest rates aggressively.
The spot precious metal rose slightly 0.3% to $1,820.90 an ounce, while US gold futures were little changed at $1,819.
Bond yields fell on a volatile day, following losses on Wall Street, after poor US housing data added to growing concerns about an economic slowdown.
“Another round of equity weakness coupled with falling yields and safe-haven bids buoyed gold prices,” said David Meger of High Ridge Futures.
The crux of the question is whether what the Fed is doing is enough given high inflation. If it’s not enough to quell inflationary pressures, gold will be supportive in that environment,” he added.
Federal Reserve Chairman Jerome Powell promised on Tuesday that the US central bank will raise interest rates as much as necessary to stop inflation from accelerating.
Gold is considered as a hedge against inflation.
However, the rate increase reduces the attractiveness of bullion, which does not bear interest.
The advance of the precious metal was limited by another safe asset such as the dollar, which rebounded on Wednesday after registering its biggest daily decline in more than two months.
In other precious metals, spot silver was minimally adjusted down 0.2% to $21.58 an ounce.
For its part, platinum lost 1.6% to 936 dollars an ounce, while palladium lost 1.8% to 2,016.08 dollars an ounce.