Gold prices fall 2% on hawkish views on Fed

On Monday, gold prices fell more than 2% to a near three-month low as increased prospects of faster rate hikes by the Federal ReserveFederal Reserve lifted US Treasury yields and the dollar.

Spot gold fell 1.6% to $1,865. On February 16 at $1,854, 31 per ounce was reached at 31 per ounce by 02: 07 p.m. EDT 1807 GMT, its lowest since February 16 at $1,854. The US gold futures settled down 2.5% at $1,863. Phillip Streible, chief market strategist at Blue Line Futures in Chicago said there was pressure on the gold market with the stronger dollar and yields amidst fears that the Fed might be more hawkish.

China's economic activity in their factory data hit lows, which is also pulling down the metals' market, he said.

The US Central Bank's Federal Open Market Committee will hold a two-day meeting on May 3, and investors are keeping a close watch on the two-day meeting.

At least until the summer, US policymakers are poised to deliver a series of aggressive rate hikes to fight rising inflation and high labor costs.

The chance of holding non-yielding bullion is increased because of the yellow metal being considered a hedge against inflation.

In April, China's factory activity contracted as widespread COVID- 19 lockdowns halted industrial production and disrupted supply chains.

The dollar was close to a 20 year high due to global growth concerns and expectations of more hawkish tone from the Fed. The 10-year US Treasury yields rose to multi-year peaks.

Daniel Pavilonis, senior market strategist at RJO Futures said that gold is having a pull back ahead of the Fed but inflation is not transitory and if inflation moves higher, gold and silver will move higher in the long term.

Spot silver fell 0.8% to $22.57 per ounce, its lowest since February 4th, earlier in the session.

Palladium fell by 4.6% to $2,214. 58, while platinum rose 0.3% to $934.05.