Gold Down on Higher Treasury Yields

Gold Down on Higher Treasury Yields

Gold down early Wednesday on higher US Treasury yields and a stronger dollar. The yellow metal under further pressure with the release of the U.S. retail sales data for January which showed a strong surge. Platinum, which climbed to a six-year high earlier in the week, also slipped.

The latest round of stimulus checks inspired consumer spending, boosting retail sales with January up 5.3%, giving 2021 a strong start, per the U.S. Labor Dept. The is far higher than the forecasted rise of 1.2%. Gold slipped 1% on the news. Meanwhile, this morning’s inflation news failed to support gold. The Producer Price Index (PPI), which measures the prices that domestic producers receive for their goods, surged 1.3%, the largest jump since December 2009. Normally such news would boost the bullion as a hedge.

Treasury yields neared their highest level in a year. Improving Treasury yields and a stronger dollar are bearish for gold because they increase the opportunity cost of buying the precious metal. Expectations that the U.S. Congress will vote next week on President Joe Biden’s $1.9 trillion economic stimulus measure put a floor under gold prices because stimulus measures are seen as inflationary, and gold is a traditional hedge against inflation.

April gold futures fell 1.3% Tuesday to settle at $1,799.00 an ounce on Comex after front-month prices rose 0.6% last week. Bullion has retreated 2.8% so far this month after declining 2.4% in January. U.S. government offices and financial markets were closed Monday for the Presidents Day holiday, and markets in China and Hong Kong were also closed. The April contract is currently down over $15 an ounce to $1,779.10 and the DG spot price is $1,782.50.

Gold and silver futures and exchange-traded funds had the biggest outflows in three months in the week ended Feb. 10, Reuters reported. Gold climbed $372 — or 24% — in 2020 because of uncertainty about the economy and the pandemic.

Spot platinum, which has gained about 18% so far this year amid forecasts for higher demand and tighter supplies, eased off highs reached earlier in the week. The autocatalyst metal climbed 11% last week, getting a boost from green energy initiatives, including stricter global emissions rules, and a concern about supplies from South Africa, the world’s largest producer of the metal, which has mounting cases of COVID-19.

Spot platinum fell Tuesday to $1,269.29 an ounce. It advanced 0.5% in January and 11% in 2020. Currently, the DG spot price is off by $24 an ounce to $1,253,60

Investors will be watching Wednesday for signals about how the pandemic is affecting the economy in the minutes from the last meeting of the Federal Open Market Committee, in January. Also scheduled for Wednesday are January retail sales and industrial production, followed by weekly initial jobless claims Thursday.

The COVID-19 virus has killed almost 2.42 million people worldwide and sickened almost 109.5 million. About 25% of the cases — and 20% of the deaths — are in the U.S. The country has about 27.8 million cases, more than any other nation.

Front-month silver futures slipped 0.3 cent to settle at $27.33 an ounce Tuesday on Comex. The March contract rallied 16% between Jan. 28 and Feb. 1, reaching an eight-year high. Silver futures have increased 1.5% so far this month after gaining 1.9% in January and 47% in 2020. Yhe March contract is down over $0.20 an ounce to $27.075 and the DG spot price is $27.16.

Spot palladium increased Tuesday to $2,418 an ounce. It plummeted 9% in January and rallied 26% in 2020. Currently, the DG spot price is down just over $20 an ounce to $2,391.00.


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