Gold retreats, poised for first back-to-back loss in about a month


Gold futures fell early Wednesday, with the metal on track to record its second straight decline and its lowest settlement in nearly two weeks.

Weakness in the asset comes as yields for benchmark government bonds have risen firmly in recent trade, providing haven-seeking investors another alternative to bullion, which doesn’t offer a coupon.

The rise in U.S. yields “delivered a sledgehammer blow to precious metal markets on Tuesday,” said Craig Erlam, senior market analyst at Oanda, in a market update.

Gold prices have generally rallied over the summer as U.S. real yields have gone negative and continued to decline, so the sudden spike in yields over the last couple of days “triggered a rush for the exits in what has become an incredibly overcrowded trade,” he said.

The rise in yields has been attributed to a “slew of upcoming auctions and higher PPI numbers, he said. Bond yields continued to rise Wednesday, as data revealed that the U.S. consumer-price index rose in July for a second month in a row.

Most recently, the 10-year Treasury note
TMUBMUSD10Y,
0.677%

yielded 0.673%, up from 0.562% at the end of last week, according to Dow Jones Market Data.

In Wednesday dealings, December gold
GCZ20,
+0.32%

GC00,
+0.32%

fell $2.30, or 0.1%, at $1,944 an ounce. A settlement around this level would be the lowest for a most-active contract since July 30, according to FactSet data. It traded low as $1,874.20 Wednesday, the lowest intraday mark for a most-active contract since July 23.

Prices for the yellow metal dropped 4.6% Tuesday, which represented the steepest one-day dollar decline since April 15, 2013, and steepest percentage slide since March 13 of this year, based on the most-active contracts.

September silver
SIU20,
-0.47%

was off 58 cents, or 2.2%, at $25.465 an ounce, after the metal tumbled 11% in the previous session to register its sharpest daily dollar fall since Sept. 23, 2011 and largest daily percentage drop since March 16 of this year.

Prices for precious metals have surged to at or near records in recent weeks at least partly on the back of the economic damage wrought by the COVID-19 pandemic, and the potential for a vaccine has been considered a bearish factor for the precious metal that thrives on uncertainty. On Tuesday, reports of a vaccine being registered in Russia helped to spark selling in silver and gold, experts said.

Among other Comex metals Wednesday, September copper
HGU20,
+0.57%

shed 0.5% to $2.861 a pound. October platinum
PLV20,
-2.55%

lost 3.4% to $938.60 an ounce and September palladium
PAU20,

inched lower by 0.2% to $2,171.60 an ounce.



Original source link