Yahoo Finance Gold Prices Under Pressure as Steeper Yield Curve Boosts Dollar
Investing.com – Gold prices gave up yesterday’s gains as the dollar and U.S. bond yields resumed their upward trend, curbing demand for the precious metal.
Gold futures for June delivery on the Comex division of the New York Mercantile Exchange fell by $9.90 or 0.74%, to $1,323.20 a troy ounce.
The 10-year US treasury yield edged higher after topping 3% for the first time in four years yesterday, lifting the dollar to a three-month high as traders bet for a faster pace of rate hikes in the wake of firmer inflation and solid economic growth.
“With real GDP accelerating in the coming quarter and core inflation reaching 2% around the same time, we believe the Fed will hike three more times this year,” Wells Fargo said Wednesday in a weekly note to clients.
The Federal Reserve at its previous meeting in March signalled that it would raise rates just three times total this year, but the odds of a fourth rate hike in December have increased significantly over the last month, according to investing.com’s Fed rate monitor.
Gold is sensitive to moves higher in both bond yields and the U.S. dollar – A stronger dollar makes gold more expensive for holders of foreign currency while a rise in U.S. rates, lift the opportunity cost of holding gold as it pays no interest.
Gold prices have struggled to find their footing as recent safe-haven demand faded amid signs of progress toward peace talks on the Korean peninsula and improving U.S.-China relations.
President Donald Trump said on Tuesday there was a “very good chance” at hashing out a trade deal with China. Trump also confirmed that U.S. Treasury Secretary Steven Mnuchin will travel to China to discuss a trade deal.
In other precious metal trade, silver futures fell 0.74% to $16.53 a troy ounce, while platinum futures fell 2.49% to $911.70 an ounce.
Copper fell 0.38% to $3.13.
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