Gold futures declined in Wednesday dealings, with the precious metal relinquishing some of the modest recovery from the previous session amid a trifecta of headwinds: a stronger U.S. dollar, rising stocks and higher bond yields.
“Higher yields in the US are continuing to provide some support for the dollar which, in turn, is keeping gold prices under pressure,” wrote Craig Erlam, senior market analyst at Oanda, in a Wednesday note.
“Gold enjoyed some mild reprieve yesterday but continues to hover near its three month lows,” the analyst wrote.
Against that backdrop, December gold
was off $13.10, or 0.7%, to trade at $1,863.30 an ounce, after rising 1.2% on Tuesday, which helped the metal recover from a 5% tumble on Monday.
Gold is “still trading above the critical support area of $1,850, but the price needs to cross above the $1,900 mark in order for it to convince traders that there is more juice left in this trade,” said Naeem Aslam, chief market analyst at AvaTrade.
Silver futures for December delivery
shed 23.2 cents, or 1%, to reach $24.23 an ounce, following a 3.2% gain in the precious and industrial metal in the previous session.
Persistent optimism about the prospects of cures and treatments for COVID-19 has, at least momentarily, overshadowed a rapid acceleration in cases in the U.S. and elsewhere in the world, which would normally underpin a rise in bullion and its sister metal silver, dealers said.
The global tally for confirmed cases of the novel strain of coronavirus that causes COVID-19 climbed to 51.5 million on Wednesday, according to data aggregated by Johns Hopkins University, while the death toll rose to 1.3 million. The U.S. has the highest case tally in the world at 10.3 million and highest death toll at 239,695 or about a fifth of the global totals.
Still, global stocks moved mostly higher Wednesday, detracting some appetite from haven gold. In the U.S., benchmark stock indexes were mixed, with the Dow Jones Industrial Average
turning lower after trading near a record high.
A rise in yields near 1%, with the 10-year Treasury note
holding near 0.98% as of late Tuesday, and a firming of the U.S. dollar, as gauged by the ICE U.S. Dollar Index
up 0.5%, were also serving as points of resistance for gold price gains in the short term.
The U.S. bond market is closed in observance of Veterans Day.
A stronger dollar can make commodities priced in the currency less attractive to overseas buyers and rising yields also undercut the relative value of gold and silver, which don’t offer a coupon.
“The action in the dollar is clearly a threat to those looking to bargain-hunt” at this week’s gold-price lows, said analysts at Zaner Metals, in a daily note. “It would appear that the dollar might have shifted focus and could be poised to trend higher off the idea that the end of the pandemic will see the U.S. economy outperform others and thereby attract inflows to its currency.”
Other metals traded on Comex declined as well, with palladium leading the percentage losses as its December contract
lost 3.9% to $2,375.10 an ounce. January platinum
also fell by 2.6% to $869.90 an ounce, while December copper
shed 1.2% to $3.1185 a pound.