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Gold Down, Hampered by Treasury Yields Spike, Strengthening Dollar

CommoditiesFeb 25, 2021 11:20PM ET
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© Reuters.

By Gina Lee

Investing.com – Gold was down on Friday morning in Asia, giving up some earlier gains and headed towards a second straight weekly and monthly decline, as raised hopes for a global economic recovery from COVID-19 and inflation fears sent U.S. Treasury yields soaring.

Gold futures were down 0.35% at $1,769.25 by 11:18 PM ET (4:18 AM GMT), with the yellow metal earlier fell to its lowest level since Feb.19. Prices were down 0.6% for the week and 0.4% for the month so far, after dropping 1.9% overnight as benchmark U.S. Treasury yields soared to their highest level since the beginning of the pandemic and gave the dollar a boost.

The dollar, which usually moves inversely to gold, edged up on Friday.

"Rising inflation expectations as markets price in the reopening of developed market economies are pushing yields higher and pressuring gold … while gold is gaining slightly on some risk hedging for the weekend, the overall picture looks dire. Gold is now in danger of a material move lower, if yields rise again,” OANDA senior market analyst Jeffrey Halley told Reuters.

SPDR Gold Trust (P:GLD), the world's largest gold-backed exchange-traded fund, also reflected investor sentiment by falling 0.6% on Thursday to its lowest level since May 2020.

On the central bank front, the U.S. Federal Reserve's comment that it is not concerned with rising bond yields has added to gold's misery, Phillip Futures said in a note.

The $1,760 level continued to be a major support for gold, the note added.

Silver eased 0.2% but was poised for a third consecutive monthly rise. Meanwhile, palladium climbed 0.8% and looked set to register its best month in a year with a more than 8% gain. Platinum also rose 0.6% and was set to mark its best month since February 2008, with an over-14% gain.

Gold Down, Hampered by Treasury Yields Spike, Strengthening Dollar
 

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Comments (4)
Brad Smith
Brad Smith Feb 26, 2021 10:01AM ET
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"gold-backed" Gina Lee, would you be able to provide any verifiable evidence to support this claim? Paper gold GLD claims to be fully backed by physical gold bullion but yet it refuses to give your everyday investors the right to redeem for any of these ‘claimed’ gold bullion. This fact alone would mean GLD shares are nothing more than paper. Furthermore, GLD’s prospectus is chalk full of weasel clauses and legal loopholes that allows the fund to get away without the full physical gold backing. One good example of this is the clause that states GLD has no right to audit subcustodial gold holdings. To this day, I have not heard of a single good reason for the existence of this audit loophole. CNBC's Bob Pisani visited GLD's gold vault. This visit was organized by GLD's management to prove the existence of GLD's gold but the gold bar held up by Mr. Pisani had the serial number ZJ6752 which did not appear on any relevant bar lists. This "GLD" bar was actually owned by ETF Securities.
Brad Smith
Brad Smith Feb 26, 2021 10:01AM ET
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On top of all that, their representatives will not confirm nor deny the existence of GLD's insurance. I recommend anyone curious about this to confirm via calling GLD's publicly listed number for general inquiries at 866 320 4053 and ask about this clause from the GLD prospectus: "The Custodian maintains insurance with regard to its business on such terms and conditions as it considers appropriate which does not cover the full amount of gold held in custody." Exactly how much of the fund is insured? They will not give you a straight answer and might even throw in some bizarre excuse which I've experienced. Why hide this information from investors? The people behind GLD certainly do not seem like the most honest types."
TITUS MUSINGILA
TITUS MUSINGILA Feb 26, 2021 8:03AM ET
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Be so sure before buyers gets aggressive and push gold to 1900, sellers are more aggressive and the commodity will at some point get to 1650 before the bull get agressive
Abdul Rahman
Abdul Rahman Feb 26, 2021 1:30AM ET
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bull will come. gold always have demand
Niraj Pal
Niraj Pal Feb 26, 2021 1:21AM ET
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Dont forget gold always shine
 
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