(Bloomberg) -- Gold dropped from near a 13-month high as risk sentiment was buoyed by Federal Reserve Chair Jerome Powell saying the U.S. central bank remains committed to fighting inflation with rate hikes.
Powell backed a quarter-point interest-rate hike this month to commence a series of increases, and didn’t rule out a larger move at some stage, despite uncertainty caused by Russia’s invasion of Ukraine. U.S. equities advanced, while 10-year Treasury yields gained.
The metal fell more than $17 in one minute as trading volume on Comex futures spiked. Bullion then pared those losses but remains down on the day, pressured by higher yields.
“Gold prices declined as Treasury yields mustered up a comeback as risk appetite tentatively returns despite intensifying Russia-Ukraine tensions,” said Ed Moya, senior market analyst at ONDA.
In February, gold had its best monthly performance since May amid mounting concern that the raft of sanctions against Russia could dim the outlook for global growth and further stoke inflation.
Bullion-backed exchange-traded funds have continued to increase their holdings in recent weeks. They added almost 14 tons on Tuesday in the biggest daily inflow in more than a month, according to an initial tally by Bloomberg.
Spot gold fell 0.9% to $1,928.57 an ounce at 3:38 p.m. in New York after rising 1.9% on Tuesday to the highest since January 2021. Bullion for April delivery slipped 1.1% to settle at $1,922.30 on the Comex. Silver declined, while platinum and palladium gained. The Bloomberg Dollar Spot Index fell 0.1%.
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