May 09, 2022: Gold prices extended their retreat to fall more than 1% on Monday as the dollar hovered near two-decade highs, dimming the metal's appeal.
Spot gold was down 1.4% at $1,856.26 per ounce by 02:00 p.m. EDT (1800 GMT). U.S. gold futures settled down 1.3% at $1,858.60.
“The dollar has exploded higher given expectations of a more aggressive U.S. Federal Reserve, in turn weighing on gold, which bears no interest,” said David Meger, director of metals trading at High Ridge Futures.
Making bullion more expensive for overseas buyers, the dollar, also considered a rival safe haven hovered near a two-decade high. Meanwhile, benchmark 10-year U.S. Treasury yields eased after hitting fresh 3-1/2 year highs earlier in the session.
Two of the Fed's policy hawks on Friday pushed back on the view the U.S. central bank missed the boat on the fight against stubborn inflation, citing tightening financial conditions that began well before it began raising interest rates in March.
U.S. stocks slid on higher U.S. Treasury yields, with sentiment taking a hit from fears of an economic slowdown in China.
While gold is considered a hedge against inflation and economic uncertainties, rapid U.S. interest rate hikes increase the opportunity cost of holding the non-yielding bullion.
Spot palladium rose 1.6% to $2,079.08 per ounce, after shedding as much as 8% on Friday amid concerns over automobile demand due to COVID curbs in China.
Investors also took stock of Britain's plan to increase tariffs on platinum and palladium imports from Russia and Belarus in new sanctions.
But prices of palladium, used in vehicle exhausts to reduce emissions, could come under pressure due to a likely market surplus with global light vehicle production forecasts for 2022 being downgraded amid the chip shortage and China's curbs, Heraeus Precious Metals said in a note.
Platinum shed 1.1% to $952.06 and silver fell 2.5% to $21.78.