Gold erases gains as US Treasury yields, dollar advance
Gold erased gains, heading for its second decline in three sessions as a rebound in US Treasury yields curbed demand for the non-interest-bearing metal.
Treasury 10Y yields rose after slumping earlier Tuesday (20 July) on speculation that the Federal Reserve will keep supporting the economy with ultra-low rates amid a resurgence in global coronavirus cases. A firmer dollar also diminished the appeal of bullion as an alternative asset.
The metal is stalling after four straight weekly gains as investors try to parse a host of economic crosscurrents, including the outlook for yields, monetary policy, and global growth. Gold, often used as a haven during times of market turmoil, is being buffeted even as new waves of Covid-19 cast a pall over prospects for a robust economic recovery.
Bullion’s “inability to rally despite the ongoing risk-off highlights that speculative flows remain particularly weak, reinforcing the potential for a deeper pullback”, said a market analyst.
Anything that forces central banks to prolong their stimulus will be welcomed by gold. In June, the metal endured its worst month since 2016 after the Fed brought forward its forecast rate hikes amid fears about inflation. Data last week showed prices paid by US consumers rose the most in more than a decade.
Spot gold fell 0.1% to USD1,810.35 an ounce by 1:57 pm in New York. Futures for August delivery on the Comex rose 0.1% to settle at USD1,811.40. Spot silver and platinum fell, while palladium gained. The Bloomberg Dollar Spot index rose as much as 0.3%. – Bloomberg News.
The US Dollar Index slipped 0.24% to 92.754, the euro gained 0.11% to USD1.1794, the pound climbed 0.62% to USD1.3713, and the yen weakened 0.40% to 110.29 per dollar.
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