Gold prices tumble as firmer US dollar, bond yields dent appeal

Gold prices closed in the red today, Feb. 21, weighed by concerns that the US Federal Reserve will continue on an aggressive interest rate-hike path.

Further, elevated US Treasury yields dented the bullion's appeal, as the yield on the 10-year bond note climbed 1.94%.

Goldman Sachs and Bank of America (BofA) said they project the Fed to raise interest rates three more times this year, lifting their estimates after recent data indicated persistent inflation and a resilient labor market.

Markets had been predicting two more quarter-point rate top-ups in March and May. But the latest forecasts suggest the central bank is likely to decide on a third increase at its June meeting, before leveling off.

Today's data showed that US business activity unexpectedly rebounded in February to an eight-month peak. S&P Global said its flash US Composite Purchasing Managers Index (PMI), which tracks the manufacturing and services sectors, jumped to 50.2 this month from a final reading of 46.8 in January.

In terms of trading, gold for April delivery contracted by 0.4%, or $7.70, to end at $1,842.50 an ounce.

Meanwhile, the US dollar index, which gauges the greenback's strength against a basket of six currencies, surged 0.4% to 104.234 points at 9:44 pm Makkah time.