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Gold futures prices nudged higher on Tuesday, having hit their lowest level in a month in the previous session. Gold gained as surging Treasury yields, which tend to move inversely to precious metals prices, pulled back and as a leading dollar index eased.
June gold was up $5.10, or 0.4%, at $1,329.20 an ounce. The contract closed at $1,324 Monday, marking its lowest finish since March 21 and dropping for a third day in a row. In fact, the three-session skid was the lengthiest since a similar downturn ended March 16. The yellow metal hit a 2 ½-month high of $1,360 as recently as April 11.
May silver eased 9 cents, or 0.5%, to $16.675 an ounce. It tumbled 3.4% to $16.587 an ounce on Monday, pulling back from its own 2 ½-month high hit last week. The decline represented the sharpest daily fall since July 3, 2017 and its longest losing trend since mid-March.
Markets have been captivated by rising U.S. bond yields recently, as the 10-year benchmark yield looked like it was about to break above the psychologically important 3% threshold. However, the yield on 10-year note, which had been at its highest since January 2014, fell 1 basis point to 2.9598% on Tuesday.
The rise in U.S. interest rates has come as traders increasingly start to price in four interest-rate hikes in 2018 from the Federal Reserve, rather than the three signaled by policy makers.
“The greenback had been on offensive since late last week after hawkish comments from Fed Governor [Lael] Brainard helped inspire steepening of the expected Fed rate-hike path,” said Ilya Spivak, commodities and currency analyst with Daily FX. “Not surprisingly, that has undermined the appeal of non-interest-bearing and anti-fiat assets epitomized by the yellow metal” before Tuesday’s mild bounce.
Higher yields can dull the investment appeal of nonyielding bullion. It is also true that accelerating inflation can eventually lure investors into the shelter of fiat gold, meaning bond market moves tend to have mixed implications for the metal. So far, however, rising yields have driven gold lower.
The ICE U.S. Dollar Index was down less than 0.1% at 90.86. Its moves impact the appeal of dollar-priced commodities, including gold, to investors using other currencies. U.S. stock futures pointed to an upbeat open on Wall Street Tuesday, with the Dow on track to break a four-session losing run as bond yields eased back.
On the economic front, the Case-Shiller home price index for February is due at 9 a.m. Eastern Time, followed by the April consumer confidence index and new home sales data for March at 10 a.m.
The SPDR Gold Shares exchange-traded fund gained 0.2% and the iShares Silver Trust rose 0.3%. The VanEck Vectors Gold Miners rose 0.7%.
Using ETF interest and other factors, MarketWatch columnist Mark Hulbert takes a look at the factors he believes are sabotaging gold’s attempts to rally beyond the relatively tight range that has penned in the metal so far this year. Hulbert argues that the odds of a contrarian buy signal for gold are even more remote today than they were six weeks ago. Read more of his column.
Elsewhere in the metals market, May copper rose 4 cents, or 1.5%, at $3.1565 a pound, while July platinum shed 90 cents, or 0.1%, to $921.50 an ounce.
June palladium dropped a further $13.25, or 1.4%, to $966.30 an ounce early Tuesday. The contract tumbled $50.65, or 4.9%, to close at $979.55 an ounce Monday. The drop on the day marked its largest one-day fall since March 1. U.S. tensions with Russia, which threaten global supplies of the metal, have recently fueled strong weekly gains for the metal, which trades more than 3% higher month to date.