By Bharat Gautam

(Reuters) – Gold prices dropped Monday due to a rise in U.S. Treasury yields, which pushed demand for zero-yield gold ahead of a Federal Reserve hike that is widely anticipated. This was done to limit rising inflationary pressures.

As of 0241 GMT, the price per ounce had fallen 0.4% to $1.888.56 U.S. declined 1.3%, to $1,886.90.

According to Stephen Innes (managing partner, SPI Asset Management), the market fears that Fed might be very hawkish pricing in a 50 base point rise and possibly 75 basis points for July.

Federal Open Market Committee of the U.S. Central Bank will meet for two days on interest rates and then announce their decision the day after that.

Fed policymakers seem set to announce a string of rate hikes until at least the summer in an effort to address rapid inflation, surging labor costs and other issues. Two reports on Friday suggested that these may be starting to happen.

Innes stated that the Fed remains behind and has tried hard to meet these expectations.

Ten-year Treasury yields for benchmark 10-years have risen towards multi-year highs which has pushed up demand for gold.

Holding bullion is more expensive than holding short-term U.S. yields or interest rates. Bullion is also considered a secure store of value in economic or political crisis times.

About 100 civilians who were evacuated in Mariupol from Azovstal’s ruined steelworks had to be transferred to a Ukrainian city, Ukrainian President Volodymyr Zilenskiy announced. The announcement came after Nancy Pelosi visited Kyiv as surprise visitor.

Spot gold fell 0.6% at $22.60/ounce. Platinum dropped 0.5% at $926.58. Palladium dropped 2.2% to $2.268.48.