Gold futures ended lower on Thursday to tally a ninth straight session decline, the longest streak of daily losses since 2017, with the yellow metal pressured by rising global bond yields and overall strength in the U.S. dollar.
Price action
-
Gold futures for December delivery
GC00,
+0.10% GCZ23,
+0.10%
declined by $13.10, or 0.7%, to settle at $1,915.20 on Comex. The yellow metal booked its longest losing streak since the 9-day streak ending March 10, 2017, according to Dow Jones Market Data. -
Silver futures for September
SI00,
+0.29% SIU23,
+0.29%
increased by 18 cents, or 0.8%, to $22.72 per ounce. -
Palladium futures for September delivery
PA00,
-0.20% PAU23,
-0.20%
rose $8.10, or 0.7%, to $1,220.50 per ounce, while platinum futures for October delivery
PL00,
+0.13%
PLV23,
+0.13%
increased by $4.30, or 0.5%, to $895.60 per ounce. -
Copper futures for September delivery
HG00,
+0.39% HGU23,
+0.39%
rose by 3 cents, or 0.9%, to $3.69 per pound.
Market drivers
There has been a “direct line between gold’s recent losses and the rise in long-term Treasury yields,” Michael Armbruster, managing partner at Altavest, told MarketWatch, adding that a strengthening dollar has been a headwind as well.
The yield on the 10-year Treasury note
BX:TMUBMUSD10Y
popped above 4.3% to its highest level since the 2008 global financial crisis.
Hawkish comments included in the minutes from the Federal Reserve’s July policy meeting released on Wednesday have helped push global bond yields to their highest levels in 15-years, according to Edward Moya, senior market analyst at OANDA.
“Gold prices are trying to recover after some hawkish Fed minutes kickstarted a global bond market selloff. Bond yields are too high as more people become convinced inflation is not going away anytime soon,” Moya said in emailed commentary.
When yields rise, the opportunity cost of holding low or zero-interest-bearing assets, including include gold and silver, rises, explained Fawad Razaqzada, market analyst at City Index and FOREX.com.
On top of that, there are “concerns about demand from China where the economy is evidently at a standstill,” he said. When China’s economy isn’t doing well, “this tends to impact demand or perceived demand for the metal in a negative way.”
Meanwhile, the ICE U.S. Dollar Index
DXY,
a gauge of the dollar’s value against major currencies, was down slightly at 103.39 in Thursday dealings, but up 0.5% week to date.
Despite strength in U.S. Treasury yields and the recent rise in the dollar, “gold has held together fairly well,” said Altavest’s Armbruster. “This suggests to us that gold could rally should investor appetite for safe havens increase if risk assets see more substantial declines.”
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