Investing.com -- Gold futures rose significantly on Tuesday, as the global bond sell-off continued to rattle markets pushing the euro up sharply against the dollar.
On the Comex division of the New York Mercantile Exchange, gold for June delivery gained 9.30 or 0.79% to 1,192.30 a troy ounce. Gold surged to 1,196.30 in European afternoon trading to reach a one-week high before falling to 1,179.70 in the U.S. morning trading session. During a choppy day of trading, gold futures then rebounded shortly thereafter to pare all of its losses in U.S. afternoon trading.
In Europe, yields on German 10-Year bunds soared more than a dozen basis points to 0.73%, extending Monday's sell-off when they rose six basis points from 0.54 to 0.60. Despite ending Tuesday's session slightly lower at 0.68%, the yields still gained more than 14% on the day. Yields on government debt increase when bond prices decrease.
Meanwhile, yields on France 10-Year bonds rose nine basis points to 0.99% and are now up by 56 basis points over the last month. Bond prices in Italian and Spanish sovereign debt continued to plunge, as the 10-year yields gained 10 and 13 basis points respectively to 1.86 and 1.87%.
Investors sought a safe haven in gold, amid the pullback in the global debt markets.
As investors unwound their positions in 10-year bunds on Tuesday, they also sought refuge in the euro which spiked 0.68% against the dollar to 1.1232. The euro was also boosted by positive developments in the Greek debt crisis, after news broke that Athens repaid a € 750 million loan to the International Monetary Fund in full before Tuesday's deadline.
Dollar-denominated commodities such as gold become more expensive for foreign purchasers when the dollar appreciates.
Earlier this spring, yields on European sovereign debt fell to record-lows after the start of the European Central Bank's ambitious €60 billion a month quantitative easing program. The yield on 10-year German bunds, for instance, nearly fell into negative territory in late-April before rebounding over the last two weeks. A rise in inflation expectations, surging oil prices and a lack of liquidity in global bond markets is believed to have caused the massive sell-off.
The sell-off spilled into U.S. bond markets on Monday, as yields on U.S. 30-Year Treasuries moved above 3% for the first time this year and the yield curve between 5-Year Treasuries and 30-year Treasuries reached its steepest level since late last year. On Tuesday, yields on the 10-Year Treasuries fell under 2.24% after reaching above 2.3% earlier in the session while yields on the 30-year fell four basis points to 2.992%.
Elsewhere, Silver for July delivery soared 0.224 or 1.40% to 16.538 an ounce.
Copper for July delivery gained 0.025 or 0.87% to 2.928 a pound.