Gold holds firm despite expectations of US interest rate hike

Gold prices rose on Monday, but expectations of tighter monetary policy in the United States limited the precious metal’s gains
With US markets closed for a public holiday, spot gold rose 0.14 percent to $1819.70 an ounce by 17:05 GMT, while US gold futures increased 0.16 percent to $1819.40.

“Monetary tightening may have a negative impact on gold, but despite that gold is holding up very well. I think the main reason is that the Federal Reserve’s balance sheet is,” said Xiao Fu, head of commodity markets strategy at Bank of China International. It is still at high levels,” according to “Reuters”.

While gold is considered a tool to hedge against inflation, it is vulnerable to higher interest rates, which may increase the opportunity cost of holding the non-yielding yellow metal.

Yields on benchmark 10-year US Treasury bonds hit a two-year high last week on interest rate hike expectations.

Among other precious metals, silver rose in spot transactions 0.22 percent to $ 23.00 an ounce, while platinum rose 0.30 percent to $ 973.23 and palladium rose 0.15 percent to $ 1880.90.