Gold Falls as Dollar, Bond Yields Jump
Gold fell to its lowest level since December on Wednesday, as the U.S. dollar surged and bond yields rose.
Comex gold futures for June delivery were down 0.15% to $1,288.40 a troy ounce as of 10:37 AM ET (14:37 GMT).
The price of bouillon was driven lower by the rise in the greenback. The U.S. dollar index, which measures the greenback’s strength against a basket of six major currencies, rose 0.15% to 93.28.
Gold is denominated in the U.S. currency and becomes more expensive for holders of other currencies when the dollar rises.
Meanwhile the precious metal was held back by rising bond yields. The yield on the benchmark United States 10-Year Treasury note was at 3.085 after reaching a seven-year high of 3.095 on Tuesday.
Strong upbeat data this week has also made it more likely that the Federal Reserve will increase interest rates. U.S. industrial production rose in April, while retail sales increased at a slower rate than forecast. Expectations of higher interest rates tend to boost the dollar by making the currency more attractive to yield-seeking investors.
Higher rates are a negative for gold as the precious metal, which does not pay interest, struggles to compete with yield-bearing assets when rates rise.
Elsewhere on the Comex, silver futures were up 0.22% to $16.305 a troy ounce. Among other precious metals, platinum fell 0.52% to $892.50 while palladium slipped 0.09% to $982.30 an ounce. Copper futures increased 0.10% to $3.059 a pound.