Gold futures were much lower on Wednesday, as U.S. Treasury yields resumed the rise and the dollar burned, pushing up prices for the precious metal.
The move comes a day after gold posted its first win in six sessions.
“Gold again avoids all but these bond yields,” Fawad Razaqzada, a market analyst at ThinkMarkets, told MarketWatch. “As yields continue to rise, so does the cost of maintaining unsecured assets such as gold. ”
“The precious metal needs a product to start falling back or the dollar to weaken quickly to find some support,” he said.
Gold for delivery in April on Comex GC00,
GCJ21,
down $ 23.70, or 1.4%, to trade at $ 1,709.90, hovering around the lowest level for bullion since early June, FactSet data shows. The slippage for the precious metal comes after Tuesday ‘s most active contract benefited after five straight declines.
Analysts at UBS also argue that the nominal yield is higher, with the 10-year Finance note TMUBMUSD10Y,
moving up 1.48% in Wednesday’s deal, and real yields are higher, including inflation, weighing on gold, which does not offer a coupon.
“U.S. high-denominated and real bond yields have hurt gold recently, and continued ETF flows should be a major challenge this year,” UBS strategists wrote in a note dated March 2 , also citing monthly data showing that gold is through trading funds. sells it high.
Analysts said they could expect gold scoring a kick in the short term but are becoming more bearish neutral on the asset in the long run, against a background of rising yields and the expectation that U.S. fiscal stimulus will further boost the economy and inflation.
“But we expect recent headlines to push back to 2H, especially as more U.S. stimulus raises expectations of an earlier-than-expected Fed rate hike,” he wrote. the UBS analyst.
As a result, UBS has reduced its gold forecasts by $ 150 per ounce,
bringing the end of June to $ 1,750, the end of September to $ 1,700, and the end of December and the end of March 2022 to $ 1,650.
On Wednesday, gold took a slightly lower leg after private sector payment data from automated Data Processing, rose 117,000 jobs in February after increasing 195,000 in the previous month. Economists surveyed by the Wall Street Journal had forecast 225,000 private sector jobs in February.
Gold prices showed little response to individual data showing the IHS Markit Services final reading at 59.8 in February, up from the original 58.9, but the ISM services survey fell to 55.3% in February from 58.7%.
Meanwhile, May SI00 money,
SIK21,
shed 71.4 cents, or 2.7%, to reach $ 26.165 an ounce, after gaining nearly 0.8% Tuesday.
May copper HGK21,
shed 1.9% to $ 4.141 per pound. April platinum PLJ21,
lost 2.6% to $ 1,183.20 an ounce and June Palladium PAM21,
margin down 0.2% to $ 2,365 an ounce.