Gold hits 8-month trough as U.S. Treasury yields rally
· Gold prices fell to their lowest in eight months on Friday, and were headed for a second straight weekly and monthly decline as brighter economic outlook and inflation fears propped up U.S. Treasury yields.
· Spot gold eased 0.1% to $1,767.81 per ounce by 0715 GMT, having earlier fallen to its lowest since June 26 at $1,755.45. Prices were down 1.4% for the week and 4.8% for the month so far.
· U.S. gold futures fell 0.6% to $1,765.70 on Friday.
· Prices had dropped 1.9% on Thursday as benchmark U.S. Treasury yields hit their highest since the pandemic began, lifting the dollar.
· "Rising inflation expectations as markets price in the reopening of developed market economies are pushing yields higher and pressuring gold," said OANDA senior market analyst Jeffrey Halley.
· Higher inflation boosts gold but also lifts Treasury yields, which in turn increase the opportunity cost of holding non-yielding bullion.
· "The overall picture looks dire, gold is now in danger of a material move lower, if yields rise again," Halley said.
· Reflecting investor sentiment, holdings in the world's largest gold-backed exchange-traded fund, SPDR Gold Trust, fell 0.6% on Thursday to their lowest since May 2020.
· The U.S. Federal Reserve's comment that it is not concerned with rising bond yields has added to gold's misery, Phillip Futures said in a note.
· Silver fell 0.7% to $27.19 an ounce, set for biggest weekly fall since mid-Jan with 1.4% decline. Palladium dropped 0.8% to $2,382.02, but was set to register its best month in three with over 6% gain.
· Platinum eased 0.1% to $1,215.09 and was set to mark its worst week since end-October with a 5.1% decline, but was on track to gain for a fourth straight month, rising more than 12%.
Reference: Reuters
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