MW: Gold falls back below $1,200 as Treasury yield rises
Gold futures found little support from a weaker dollar Thursday, with investors instead taking a cue from rising U.S. Treasury yields after the Federal Reserve’s policy statement a day earlier.
Gold for June delivery on Comex GCM5, -1.36% fell $12.20, or 1%, to $1,197.80 an ounce, leaving the metal on track for a 1.3% monthly gain. July silver SIN5, -1.15% dropped 14.2 cents, or 0.9%, to $16.56 an ounce.
Gold fell back toward session lows after data showed first-time claims for U.S. unemployment benefits fell much more than expected to a 15-year low of 262,000 in the week ended April 25.
The U.S. dollar remains under pressure after the Federal Reserve on Wednesday appeared in no rush to raise interest rates, leaving intact market expectations that it is unlikely to deliver a rate hike in June. The ICE dollar index DXY, -0.07% a measure of the U.S. currency against a basket of six major rivals, was down 0.5% at 94.772 in recent action and has declined 3.7% since the end of March, trimming its year-to-date rise to 5%.
While a weaker dollar can be a positive for commodities priced in the U.S. unit, since it makes them cheaper in terms of other currencies, investors have paid little heed, noted Eugen Weinberg, commodity strategist at Commerzbank.
“The significantly lower equity markets lent virtually no support to gold either,” Weinberg wrote. “Any increase in price was probably also blocked by the fact that yields on 10-year U.S. Treasurys TMUBMUSD10Y, +1.26% rose to over 2%.”
Treasury yields extended their rise after the jobless-claims data, pushing the 10-year above 2.05%.
Higher yields can spell weakness for gold, which like other commodities offers no yield and suffers more by comparison.
In other metals trade, July platinum PLN5, -1.34% fell $13, or 1.1%, to $1,148.50 an ounce, while June palladium PAM5, -0.73% lost $3, or 0.4%, to $781.75 an ounce.
