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Gold Down, Hampered by Treasury Yields Spike, Strengthening Dollar

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·2 min read
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By Gina Lee

Investing.com – Gold was down on Friday morning in Asia, giving up some earlier gains and headed towards a second straight weekly and monthly decline, as raised hopes for a global economic recovery from COVID-19 and inflation fears sent U.S. Treasury yields soaring.

Gold futures were down 0.35% at $1,769.25 by 11:18 PM ET (4:18 AM GMT), with the yellow metal earlier fell to its lowest level since Feb.19. Prices were down 0.6% for the week and 0.4% for the month so far, after dropping 1.9% overnight as benchmark U.S. Treasury yields soared to their highest level since the beginning of the pandemic and gave the dollar a boost.

The dollar, which usually moves inversely to gold, edged up on Friday.

"Rising inflation expectations as markets price in the reopening of developed market economies are pushing yields higher and pressuring gold … while gold is gaining slightly on some risk hedging for the weekend, the overall picture looks dire. Gold is now in danger of a material move lower, if yields rise again,” OANDA senior market analyst Jeffrey Halley told Reuters.

SPDR Gold Trust (P:GLD), the world's largest gold-backed exchange-traded fund, also reflected investor sentiment by falling 0.6% on Thursday to its lowest level since May 2020.

On the central bank front, the U.S. Federal Reserve's comment that it is not concerned with rising bond yields has added to gold's misery, Phillip Futures said in a note.

The $1,760 level continued to be a major support for gold, the note added.

Silver eased 0.2% but was poised for a third consecutive monthly rise. Meanwhile, palladium climbed 0.8% and looked set to register its best month in a year with a more than 8% gain. Platinum also rose 0.6% and was set to mark its best month since February 2008, with an over-14% gain.

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