Gold futures moved lower on Thursday, pulling back to their highest intraday rate in more than two weeks, with prices under pressure with the rise in U.S. Treasury yields and strength in the dollar.
Prices for the precious metal had accumulated shortly after the Federal Reserve on Wednesday maintained its benchmark interest rate unchanged near zero, possibly through 2023.
The central bank also added to its outlook for economic growth, while Fed Chairman Jerome Powell said policymakers want inflation to push above their 2% target, along with development in the labor market, before starting to raise interest rates or withdraw its program of asset purchases.
On Thursday, however, gold declined amid renewed sales in government bonds, which pushed yields significantly higher, with 10-year TMUBMUSD10Y Treasury yields,
up more than 9 base points to nearly 1.73%. Rising yields have been negative for gold, as they raise the cost of opportunity to maintain non-yielding assets, but analysts said dynamics could move.
Financial yields have continued to rise even after the Fed continued to project near-zero interest rates through at least 2023 in a dovish move on Wednesday, which initially triggered the U.S. dollar to fall and stocks to rise, said Fawad Razaqzada, market analyst at ThinkMarkets.
“But both movements have clearly reversed, causing gold to reverse its benefits,” he said.
“Rising yields and a rebounding dollar are a toxic mix for precious metals, and especially for gold,” he said. “This is because the opportunity cost of holding on to gold, interest-free assets or any dividends is rising as investors seeking a better and safer return could get a better and safer return. by retaining government debt. ”
Dollar Strength, with US ICE Dollar Index DXY,
up nearly 0.5% also on dollar-denominated prices for the metal.
Gold for April GCJ21 delivery,
decreased by $ 2.10, or 0.1%, to $ 1,725 an ounce on Comex. Trading prices were as high as $ 1,754.20, the highest intraday rate since March 2, FactSet data show.
May SIK21 money,
however, cut by 9.2 cents, or 0.4%, at $ 26.15 an ounce.
“Until production stops, it is difficult to be optimistic about the outlook for gold, even though prices have now fallen close to their pre-release levels, leaving them relatively cheap and low. ‘wish, I’m attractive, for some long term term gold bug,’ “Razaqzada said.
Other metals traded on Comex Thursday, May copper HGK21,
fell 0.1% to $ 4.12 per pound.
April platinum PLJ21,
it rose 1.2% to $ 1,213.70 an ounce and June Palladium PAM21,
traded at $ 2,695.50 an ounce, up 6.1%.
Palladium was on track to conclude a weekly gain of more than 14%, with the rally driven by supply concerns after Norilsk Nickel, a major producer of palladium, said this week that its metal production levels fall below the 2021 production direction.