Reuters
Gold futures dropped Thursday, deepening their descent below the key $1,300 line, after trading this week to their lowest point of the year.
”The firm U.S. dollar and rising U.S. bond yields are continuing to exert pressure,” said Carsten Fritsch, commodities analyst at Commerzbank.
“Yields on 10-year U.S. Treasury notes have climbed further to 3.12%. The yield advantage over German government bonds of the same maturity has meanwhile reached 250 basis points. The last time it was any higher was almost 30 years ago,” he said. “This argues in favor of the U.S. dollar, against the euro and also against gold, which yields no interest.”
With those market dynamics at work, June gold fell by $4.20, or about 0.3%, to $1,287.30 an ounce after a mild rebound for prices on Wednesday. Earlier this week, gold dropped by more than 2% to $1,290.30, the lowest settlement for a most-active contract since late December, according to FactSet data.
July silver took another path, trading at $16.415 an ounce, up 0.3%.
The yield on the 10-year Treasury note was steady near a 7-year high at 3.1%. The U.S. dollar, as measured by the ICE U.S. Dollar Index was up 0.2% at 93.51, maintaining trade at its highest level of 2018, according to FactSet data.
Higher yields dent demand for nonyielding bullion and a strengthening greenback makes commodities priced in the currency, like gold, more expensive to buyers using other monetary units.
On the economic front, updates for weekly jobless claims and the Philly Fed index for May are both due at 8:30 a.m. Eastern Time, followed by leading indicators for April at 10 a.m. Eastern.
Gold hasn’t earned a ton of traction from geopolitical developments, though the metal’s tight range of roughly $1300 to $1350 for much of the year before the latest retreat was credited in part to demand for the haven metal.
A second round of U.S./China trade talks was set to begin in Washington on Thursday, which comes amid a running standoff between the two countries over tariffs. Meanwhile, questions are lingering over another geopolitical front—North Korea—after Pyongyang signaled a day earlier that Kim Jong Un might pull out of next month’s summit with Trump if the U.S. insists on denuclearization for the isolated nation.
Among other metals, copper for July delivery meanwhile, rose 0.3% to $3.0805 a pound. July platinum shed 0.4% to $886.70 an ounce, while June palladium fell 0.5% to $977.70 an ounce.
In exchange-traded action, the SPDR Gold Shares fell 0.2%, while the iShares Silver Trust climbed 0.2%. The VanEck Vectors Gold Miners eased 0.4%.