Gold futures extended a decline on Wednesday, with bullion eyeing the lowest settlement since late November if prices hold below $1,790, as rising u.S. bond yields weigh on precious metals.
“Gold futures prices are down and hit a 2.5-month low in early U.S. trading Wednesday,” wrote Jim Wyckoff, senior analyst at Kitco.com in a research note on Wednesday.
“Rising government bond yields are another negative for gold and silver,” the analyst said.
April gold was trading $19, or 1.1%, lower at $1,780 an ounce, after skidding 1.3% on Tuesday, putting the yellow metal on track to book its lowest finish since the end of November, according to FactSet data.
The move south for gold comes as yields in U.S. Treasuries, seen as a direct haven competitor to gold that also offers a coupon, have been touching their highest levels in months and making a more compelling case to own bonds compared against commodities that don’t offer a yield.
The 10-year Treasury note yield, for example, was hanging around 1.3%, putting the government bond near its highest level since late February of 2020.
“Rising yields and a stronger dollar were anathema for gold as the precious metal once again found itself beneath the crucial $1800/oz level,” wrote Raffi Boyadjian, senior investment analyst at XM.
Looking ahead, commodity investors might look to data to glean the near-term outlook for metals, with an account of the Federal Reserve’s late-January meeting due at 2 p.m. Eastern and market participants also watching data on U.S. retail sales for January, which could help gauge the health of the consumer amid the COVID-19 pandemic.
Meanwhile, silver for March delivery traded 20 cents, or 0.7%, lower at $27.13 an ounce, following a slightly lower settlement on Tuesday.