Gold's Slide Extends, Wiping Out Most Of Its Year-To-Date Gains‍

A decline in gold prices is expected on Tuesday as traders anticipate a second round of Fed rate hikes in the near future.

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As U.S. traders returned from a three-day weekend, gold prices fell on Tuesday amid expectations that the Federal Reserve will raise interest rates again in the weeks ahead as the yellow metal finished in the red for the third consecutive week.

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Price Action

• There were $6.30, or 0.3%, declines in most of the gold contracts traded on Comex for April delivery GC00, -0.39% GCJ23, -0.38%, with the standard contract moving roughly 0.1% higher year-to-date. Meanwhile, GC00 rose from $1,843.90 per ounce to $1,843.90 per ounce last week, FactSet data showed.

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• In the month of March, silver SI00, 0.76% SIH23, 0.76% updated its price to $21.795 per ounce, an increase of 8 cents, or 0.4%.

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• In the meantime, platinum for April delivery PLJ23, 2.62% increased $13.80, or 1.5%, to $935.20 per ounce, while palladium for March delivery PAH23, +1.01% climbed $31.50, or 2.1%, to $1,524 per ounce.

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• The copper price for the month of March HGH23, 2.46% climbed by 10.3 cents, or 2.5%, to $4.2135 per pound.

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Market Drivers

Gold's year-to-date gains have been nearly erased by shifting expectations about the Fed's plans, as the U.S. dollar and Treasury yields have moved higher, resulting in gold losing nearly all of its year-to-date gains.

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There was a holiday in the U.S. on Monday because of President's Day, but it is also emerging that the markets may be set to post their first monthly loss in four months after recording losses in the last three weeks.

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According to Lukman Otunuga, manager of market analysis at FXTM, the gold price has been on a downward trajectory to begin this month as the optimism created by the good jobs and inflation figures has driven up Treasury yields by the Federal Reserve. Hawkish statements from Fed officials have added more salt to the wound that gold is currently experiencing.

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A hawkish set of Fed minutes [due out Wednesday] will likely add insult to injury given the fact that the precious metal is heading towards its first monthly loss since October 2022, thereby dragging prices toward $1,800, he wrote in market commentary. Since the precious metal is expected to experience its first monthly loss since October 2022, bulls need to get their mojo back. This could result in further downside in the short- to medium-term if such a development takes place.

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It is also noteworthy to mention that the dollar strengthened after two S&P surveys showed that the U.S. economy showed signs of an improvement in February, making gold more expensive for those who wish to purchase it in another currency.

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An index covering the strength of the United States dollar against a basket of rival currencies, known as the ICE U.S. Dollar Index, was up 0.3% to 104.21 at the time of writing.