Gold futures gave up early Monday gains to stretch losses into a fifth straight session despite a pause in the run up for Treasury yields.
The day’s “pause in the bond market sell-off hasn’t yet changed the narrative,” Adrian Ash, director of research at BullionVault, told MarketWatch. Bond prices move inversely to yields.
Consensus says the COVID recovery is already here, even before the next round of stimulus checks arrive, he said. “Gold continues pricing that in, reversing last year’s big gains as the financial markets race ahead of reality.”
Gold for April delivery on Comex
GC00,
-0.56%
GCJ21,
-0.56%
lost $5.80, or 0.3%, to settle at $1,723 an ounce after trading as high as $1,757.40. Prices based on the most-active contract registered another finish at the lowest since June 2020, FactSet data show.
Monday’s move comes after gold saw a weekly decline of about 2.7% and a loss of 6.6% for the month, which was its largest monthly fall since November of 2016.
The 10-year benchmark Treasury note
TMUBMUSD10Y,
1.454%,
touched a yield around 1.55% last Friday but was around 1.44% on Monday.
The Federal Reserve has suggested the climb in yields reflects upbeat expectations for an economic recovery fueled by the vaccine program and the likelihood of additional fiscal stimulus.
Meanwhile, the dollar, as gauged by the ICE U.S. Dollar index
DXY,
+0.21%
was up 0.2%.
A firmer dollar, which most commodities are priced in, and rising yields can make gold less appealing to buyers comparing the haven asset against yield-bearing investments that are perceived as safe. Gold doesn’t offer a coupon.
Jeff Wright, chief investment officer at Wolfpack Capital, told MarketWatch that the strength in U.S. equity markets likely contributed to gold’s turn lower Monday. The approval of Johnson & Johnson’s JNJ, +1.05% one-shot vaccine appeared to be buttressing risk-taking on Wall Street.
The Centers for Disease Control and Prevention over the weekend approved the use of J&J’s COVID vaccine after the Food and Drug Administration also green lighted the virus remedy.
The selloff in gold is related to U.S. equity markets moving higher, along with 10-year Treasury yield also coming back off the day’s lows, he said.
Meanwhile, the House passed the Biden administration’s $1.9 trillion COVID-19 relief package.
Separately, May silver
SI00,
+0.30%
SIK21,
+0.30%
rose 24 cents, or 0.9%, to $26.678 an ounce, after prices on Friday marked a 3% weekly loss, and 1.8% monthly decline.
May copper
HGK21,
+0.23%
tacked on 0.5% to $4.113 a pound.
Read: Why copper scored its biggest monthly gain since 2016
April platinum
PLJ21,
+0.50%
settled at $1,191.320 an ounce, up 2.5%, while June palladium
PAM21,
+1.21%
rose 1.5% to $2,349 an ounce.
