Gold Rises as Treasury Yields, Dollar Stabilize
By Amrith Ramkumar and David Hodari
Gold prices rose Monday, supported by muted moves in Treasury yields and the dollar.
Front-month gold for February delivery added 0.8% to $1,324.20 a troy ounce on the Comex division of the New York Mercantile Exchange. Prices fell last week despite a surge in stock-market volatility, with some analysts attributing the declines to investors selling gold to raise money for their bets on stocks and concerns about higher interest rates. Gold is a haven asset that some investors favor when they think markets might turn rocky.
Some analysts said gold having its worst week in two months was also a sign that investors weren't fundamentally worried about the health of the stock market or economy.
Because gold struggles to compete with yield-bearing assets like Treasurys as borrowing costs rise, some investors said the precious metal was falling for the same reason as stocks, which some also think will look less attractive as central banks around the world unwind years of accommodative monetary policy.
"There is still a negative impact," from higher rates, said Bart Melek, head of commodity strategy at TD Securities. "I think there was an element of using gold to provide capital for margins," he added.
A recent rise in Treasury yields moderated Monday, with the yield on the 10-year U.S. Treasury note at 2.862%, according to Tradeweb, after earlier piercing 2.89% and closing at 2.829% Friday -- around a four-year high.
The WSJ Dollar Index, which tracks the U.S. currency against a basket of 16 others, fell 0.2% Monday. The dollar rebounding from multiyear lows has also dragged gold off its highest level since August 2016 lately by making the dollar-denominated commodity more expensive for overseas buyers.
Investors will be tracking inflation data later in the week for the latest reading on the U.S. economy. The data could affect views on central bank policy, some analysts said. Some investors also use gold to hedge against an unexpected rise in consumer prices.
Among base metals, front-month copper for February delivery added 1.8% to $3.0775 a pound. The industrial metal stumbled last week alongside stocks, oil and other risk assets amid inventory concerns and is 5.4% off its four-year highs from late December. Still, some investors expect prices to rise, supported by strong demand based on global economic growth and the prospect of supply disruptions.