Gold falls on strong dollar, higher United States yields

  • Gold falls on strong dollar, higher United States yields

Gold falls on strong dollar, higher United States yields

"There is a bit more confidence in the USA and that negatively affects gold", said Natixis precious metals analyst Bernard Dahdah.

Spot gold was down 0.1 per cent at $1,329.04 per ounce at 0335 GMT.

While US Treasury yields rose yesterday, gold was helped by weakness in the US dollar.

Shanghai bucked the trend and slipped 0.3 per cent. As a result, bond yields are soaring.

When the yield on USA 10-year government debt surged in February, stock prices tumbled around the world.

"The equity markets slid sharply in January and March in response to the rise in Treasury yields". US shares were set to drift lower with Dow futures down nearly 0.1 percent and S&P 500 futures 0.4 percent lower.

June Gold Futures

"Expectations towards US rate hikes being gradual are enabling equities to take the current yield rise in stride".

The benchmark U.S. 10-year Treasury yields rose to 3 per cent for the first time in more than four years, reflecting the durability of the USA economic expansion after United States consumer confidence rebounded in April and new home sales increased more than expected in March. The yield has climbed on expectations of a steady USA economic expansion, accelerating inflation and concerns about increasing debt supply.

The dollar index, which measures the greenback against a basket of currencies, rose to a four-month high, up 0.4pc. Investors juggled downward pressure after Iran squashed hopes that OPEC would extend its production cap pact with support on fears US sanctions could dampen Iran's output. The euro fell to $1.2182 from $1.2196. The ECB is widely expected to keep policy unchanged but its comments will be followed closely for further guidance on the timing of its scaling-back of massive monetary stimulus.

The dollar was steady at 109.420 yen after going as high as 109.490, its strongest since February 8. Investors are worrying about the growing supply of government debt and accelerating inflation as oil and commodity prices have been rising in recent weeks.

USA crude CLcv1 settled up 0.35 percent at $68.64 per barrel and Brent LCOcv1 was last at $74.71, up 0.88 percent.

Higher U.S. yields and a stronger dollar weighed on nonyielding gold, with spot prices slipping to a five-week low of $1,318.51 an ounce overnight.