Gold Extends Slump With Dollar, Yields Gaining; Platinum Slips

(Bloomberg) -- Gold headed for a fourth straight decline as the dollar rebounded amid bets for a swift economic recovery and Treasury yields advanced to the highest in a year.

Rates on 30-year debt pushed above 2% to the highest since February 2020 as rising energy costs and the outlook for U.S. government spending bolstered reflation trades. Rising yields erode gold’s appeal, as the metal bears no interest. Equities also rallied, while a stronger dollar made greenback-denominated bullion less attractive for investors holding other currencies.

Gold has slumped more than 4% in 2021, losing ground after posting its biggest annual gain in a decade. Coronavirus vaccination drives and efforts to reinvigorate economies have damped the appeal of the metal as a haven. With signs of a recovery from the pandemic undercutting global demand, bullion’s 50-day moving average retreated below its 200-day counterpart, a so-called death cross technical pattern that may presage further losses.

“Higher yields and in particular rising real yields at open are hurting gold,” said Tom Fitzpatrick, chief technical FX strategist at Citigroup Inc. Fitzpatrick also noted that the $1,765-$1,795-an-ounce range is important for gold. “If that gives way we could see a very sharp deep fall.”

Spot gold declined 1.3% to $1,795.58 an ounce by 9:42 a.m. in New York. Platinum lost 3% to $1,266.89 an ounce , after earlier climbing as much as 2.6% to $1,339.73, the highest since September 2014. Silver and palladium also declined. The Bloomberg Dollar Spot Index strengthened 0.4%.

Platinum slipped as its recent rally pushed the 14-day relative-strength index above 70, a sign that the market may have become overbought. The metal has climbed about 20% this year, outperforming peers on signs that an economic recovery from the pandemic is set to boost demand for the metal used to curb pollution from cars and trucks.

Increasingly, platinum is being viewed as a bet on a greener economic recovery from the pandemic. Europe, China and the U.S. are all tightening emissions standards this year, boosting demand for platinum-group metals.

“As long as the ‘everything’ rally continues, investors prefer platinum with its green transformation and tight supply over gold,” said Ole Hansen, head of commodity strategy at Saxo Bank A/S.

Still, miner MMC Norilsk Nickel PJSC expects the market to swing to a significant surplus this year.

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