On Thursday, the precious safe-haven yellow metal gold futures’ prices gobbled down lofty losses, tumbling as much as 2.2 per cent to a nearly one-week low as a jubilation over prospects of an end to the pandemic outbreak shot up US Treasury Yields to a one-year peak while depreciating an appetite for safe-haven assets.
If truth is to told, gold futures are often contemplated as a leverage against inflation, though a sharp rise in US bond yields following Fed’s Powell’s remark on Tuesday, had corroded the yellow metal’s safe-haven bid.
On top of that, in the day’s steep decline in gold futures’ prices were almost entirely catalysed by a heightening up of optimism of a near term end of the pandemic outbreak, while a higher US bond yield had added to further strains on safe-haven currencies and commodities likes of gold, platinum and palladium.
Gold futures tumble to a week low amid rising US bond yields
In tandem, echoing the tone of Fed Chair Powell’s testimony before a Senate Banking Panel earlier this week, Kansas City Fed President Esther George was quoted saying that a latest rise in US bond yields was largely prompted by growing optimism of an economic recovery from the pandemic-inflicted fiscal wounds.
Citing statistics, in the day’s commodity market wind-down, spot gold futures which had shed over 6 per cent this year thus far, tottered 1.8 per cent to round off the day at $1,772.86 per ounce after hitting an intra-session low of $1,765,06 an ounce, the lowest treadle since February 19, while US gold futures’ prices pommelled 1.3 per cent to $1,775.40 an ounce.
Among other precious metal futures, silver shed 1.9 per cent to $27.46 per ounce, while platinum and palladium contracts dropped as much as 3.5 per cent and 1.1 per cent respectively. Meanwhile, addressing to a short-term bearish momentum in precious metals’ futures’ prices, an analyst at Kitco Metal, Jim Wychoff said, “Rising government bond yields are at least short-term bearish for the precious metals markets.
The shorter-term, chart-based futures trader bears are having their way with the gold market at present. ”