Gold prices extend losses as firmer Treasury yields dent appeal

April 20: Gold prices eased on Wednesday, following a sharp drop in the previous session, as elevated U.S. Treasury yields continued to pull investors away from zero-yield bullion.

FUNDAMENTALS

* Spot gold was down 0.2% at $1,946.04 per ounce, as of 0038 GMT. U.S. gold futures fell 0.5% to $1,949.50.


* In the previous session, gold prices fell up to 1.8% to an over one-week low as a stronger U.S. dollar and rising Treasury yields overshadowed safe-haven inflows into bullion.

* U.S. Treasury yields continued to surge to multi-year highs as investors prepared for the Federal Reserve to aggressively raise rates as the central bank tries to stem soaring inflation.

* Gold is highly sensitive to rising U.S. interest rates and higher yields, which increase the opportunity cost of holding non-yielding bullion.

* The dollar held near recent highs, making the greenback-priced gold less attractive for other currency holders.

* The International Monetary Fund on Tuesday slashed its forecast for global economic growth by nearly a full percentage point, citing Russia's war in Ukraine, and warning that inflation was now a "clear and present danger" for many countries.

* Major central banks, already plotting interest rate hikes in a fight against inflation, are also preparing a common pullback from key financial markets in a first-ever round of global "quantitative tightening" expected to restrict credit and add stress to an already-slowing world economy.

* Spot silver dipped 0.5% to $25.04 per ounce, platinum eased 1.1% to $979.74, and palladium edged down 0.1% to $2,369.36.


DATA/EVENTS (GMT)

1400 US Existing Home Sales March

1230 IMF Chief Kristalina Georgieva holds opening news

conference at the IMF/World Bank Spring Meetings

1315 World Bank President David Malpass holds opening news conference at the IMF/World Bank Spring Meetings

1800 Federal Reserve issues the Beige Book of economic condition