Gold settled higher Tuesday, on the heels of three consecutive sessions of declines, lifting prices up from the roughly one-month low they settled at in the previous session.
Gold gained as a steep decline in a benchmark U.S. stock index drove haven demand for the metal, even as Treasury yields, which tend to move inversely to precious metals prices, climbed.
June gold GCM8, -0.04% added $9, or 0.7%, to settle at $1,333 an ounce. The contract closed at $1,324 Monday, marking its lowest finish since March 21 and dropping for a third day in a row. In fact, the three-session skid was the lengthiest since a similar downturn ended March 16. The yellow metal hit a 2 ½-month high of $1,360 as recently as April 11.
May silver SIK8, +0.01% added 11.6 cents, or 0.7%, to $16.703 an ounce. It tumbled 3.4% to $16.587 an ounce on Monday, pulling back from its own 2 ½-month high hit last week. The decline represented the sharpest daily fall since July 3, 2017 and its longest losing trend since mid-March.
Markets have been captivated by rising U.S. bond yields recently, as the 10-year benchmark yield TMUBMUSD10Y, -0.25% tested the psychologically important 3% threshold Tuesday.
The rise in U.S. interest rates has come as traders increasingly start to price in four interest-rate hikes in 2018 from the Federal Reserve, rather than the three signaled by policy makers.
“The greenback had been on offensive since late last week after hawkish comments from Fed Governor [Lael] Brainard helped inspire steepening of the expected Fed rate-hike path,” said Ilya Spivak, commodities and currency analyst with Daily FX. “Not surprisingly, that has undermined the appeal of non-interest-bearing and anti-fiat assets epitomized by the yellow metal” before Tuesday’s mild bounce.
Higher yields can dull the investment appeal of nonyielding bullion. It is also true that accelerating inflation can eventually lure investors into the shelter of fiat gold, meaning bond market moves tend to have mixed implications for the metal. So far, however, rising yields, overall, have driven gold lower.
The ICE U.S. Dollar Index DXY, +0.02% was down less than 0.1% at 90.89. Its moves impact the appeal of dollar-priced commodities, including gold, to investors using other currencies. U.S. stock futures pointed to an upbeat open on Wall Street Tuesday, with the Dow on track to break a four-session losing run as bond yields eased back.
U.S. stocks, meanwhile, traded broadly lower, offering support for the haven metal, with the Dow Jones Industrial Average DJIA, -1.74% trading roughly 2% lower as gold futures settled.
On the U.S. economic front, the S&P/Case-Shiller national index rose a seasonally adjusted 0.5% and was up 6.3% compared to a year ago in February. Consumers confidence rebounded slightly in April with a small gain that put the index back near an 18-year high.
Using ETF demand and other factors, MarketWatch columnist Mark Hulbert takes a look at the factors he believes are sabotaging gold’s attempts to rally beyond the relatively tight range that has penned in the metal so far this year. Read more in his column.
June palladium PAM8, -0.91% shed a further 0.8% to $971.65 an ounce Tuesday. The contract tumbled $50.65, or 4.9%, to close at $979.55 an ounce Monday. That drop marked its largest one-day fall since March 1. U.S. tensions with Russia, which threaten global supplies of the metal, have recently fueled strong weekly gains for the metal, which trades more than 3% higher month to date.