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Gold slides more than 2% as U.S. Treasury yields rise

·         Gold prices fell as much as 2.2% to a near one-week low on Thursday as a surge in U.S. Treasury yields and better-than-expected economic data out the United States dented demand for the safe-haven metal.

 

·         Spot gold was down 1.8% at $1,772.86 per ounce at 01:49 p.m. ET (1849 GMT), after earlier touching its lowest since Feb. 19 at $1,765.06.

 

·         U.S. gold futures settled down 1.3% to $1,775.40.

 

·         “We’re seeing bond yields move higher over the last few weeks and that once again has taken some of the wind out of the sails in the gold market,” said David Meger, director of metals trading at High Ridge Futures.

 

·         While gold is often sought as a hedge against inflation, higher bond yields have eroded that status since they increase the opportunity cost of holding bullion.

 

·         The recent rise in real rates is a sign of growing optimism about the recovery and does not warrant a response from the Federal Reserve, Kansas City Fed President Esther George said, echoing Fed Chair Jerome Powell’s testimony on Tuesday.

 

·         “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,” said Kitco Metals senior analyst Jim Wyckoff in a note.

 

·         Meanwhile, data showed fewer Americans filed new claims for unemployment benefits last week.

 

·         Gold is down nearly 6% so far this year after posting its best year in a decade in 2020 on virus fears, lower interest rates and unprecedented stimulus measures.

 

·         “There are other supportive factors for gold at play (including) prospects of another stimulus package. We’re not out of the woods yet when it comes to economic recovery and the Fed is unlikely to raise interest rates anytime soon,” High Ridge Futures’ Meger said.

 

·         Silver dipped 1.9% to $27.46 an ounce, and platinum fell 3.5% to $1,224.14.

 

·         Palladium slipped 1.1% to $2,408.98, after hitting its highest in nearly two months.

 

·         Dollar firms on sudden spike in U.S. Treasury yields

 

he dollar index lifted off a seven-week low on Thursday after yields on 10-year U.S. Treasuries jumped as high as 1.6% following weaker-than-expected bids in a U.S. government debt auction.

 

The move was the latest example of currency markets taking their cue from bonds, which have been moving on the changing outlook for economic growth and inflation following unprecedented government stimulus and monetary easing along with increasing COVID-19 vaccinations.

 

The dollar was up 0.27% against a basket of currencies in the early New York afternoon after dipping as much as 0.26% to 89.677, its lowest since Jan. 8.

 

The benchmark 10-year Treasury yield was 1.55%, still up 16 basis points on the day. The spike to 1.6% came in the early afternoon when an auction of $62 billion of 7-year notes was met with weak demand.

 

The rise in bond yields, after adjusting for inflation, has accelerated in recent days, indicating a growing belief that central banks may begin to pare back ultra-loose policies, even as officials maintain a dovish rhetoric.

 

The euro rose to a three-week high, gaining 0.5% before backing off. It was last off 0.05% at $1.2164.

 

The safe-haven Japanese yen, which tends to underperform when global growth improves, weakened as far as 106.29 yen per dollar.

 

·         US government revises fourth quarter GDP up slightly to 4.1%

 

The economy grew at a slightly faster pace in the final three months of 2020 than first thought, ending a year in which the overall economy shrank more than it had in the past seven decades.

 

Gross domestic product the broadest measure of economic health grew at an annual rate of 4.1% in the fourth quarter, up from an initial estimate of 4% growth, the Commerce Department reported Thursday.

 

·         Orders for U.S. durable goods climb 3.4% in January

 

Orders to U.S. factories for big-ticket goods shot up 3.4% in January, pulled up by surge in orders for civilian aircraft. A category that tracks business investment posted a more modest gain, the Commerce Department reported Thursday.

 

·         S. Korea prepares for vaccine shots as 1st batch of 1.5m doses begins to ship

 

Trucks and ships carrying the first batch of some 1.5 million doses of coronavirus vaccines headed across the country Thursday, marking the start of the long-awaited vaccination program in South Korea, where COVID-19 cases are nearing 90,000 since the first confirmed case in January last year.

 

·         Oil mixed, U.S. crude hits highest since 2019 as refineries restart

 

Oil prices were mixed on Thursday with U.S. crude edging up to its highest close since 2019 as Texas refineries restarted production after last week’s freeze, while Brent eased on worries that four months of gains will prompt producers to boost output.

 

Brent futures for April delivery fell 16 cents, or 0.2%, to settle at $66.88 a barrel. The April Brent contract expires on Friday.

 

U.S. West Texas Intermediate (WTI) crude, meanwhile, ended 31 cents, or 0.5%, higher at $63.53, its highest close since May 2019.