Gold extends retreat as bond yields, stocks rise
By Mark DeCambre, MarketWatch
Silver futures give up 5 cents as precious metals continue retreat
Gold slipped further in to negative territory on Tuesday as Treasury yields extended their climb, taking away some of the yellow metal's luster, and as assets considered risky attracted bidders away from so-called haven assets.
December gold on Comex was down $2.70, or 0.2%, at $1,273 an ounce, after settling at the lowest level since Aug. 8 in the prior session. Gold is on pace to decline for a third straight session as U.S. government bonds got a boost off increased expectations that Federal Reserve Chairwoman Janet Yellen and fellow policy makers are inclined to lift interest rates once more before the end of 2017. The 2-year Treasury yield note , the most sensitive to shifting interest-rate expectations, hit a 52-week high (http://www.marketwatch.com/story/treasury-yields-see-muted-action-after-better-than-expected-manufacturing-data-2017-10-02) on Monday and was most recently at 1.491% Tuesday.
Higher bond yields, which move inversely to prices, can make owning gold, which doesn't offer interest, less appealing. The exchange-traded SPDR Gold Shares ETF(GLD), meanwhile, was poised to trade flat.
Mihir Kapadia, CEO of Sun Global Investments, said gold is being pressured by strength in the greenback, in a downturn in physical buying. The dollar, as measured by the U.S. ICE Dollar Index , which measures the currency against a half-dozen rivals, was flat on the day but has gained 0.6% over the past few days. Dollar strength tends to make buying bullion, which is priced in dollars, less attractive to investors using weaker currencies.
"London spot gold prices were close to a two-month low in Asia, weighed by the stronger dollar. There is also lack of physical buying support as China's markets closed for holidays this week and India's festival demand has been weak in line with their economy," Kapadia said in a Tuesday research note.
Meanwhile, U.S. stocks, notably the Dow Jones Industrial Average and the S&P 500 index , looked poised to open higher after all the main equity benchmarks hit records on Monday. Much of the enthusiasm around equities has been driven by optimism that President Donald Trump's administration will implement tax policies, including tax cuts and repatriation of money held abroad, that could boost appetite for risky assets and away from gold.
December silver gave up 5 cents, or 0.3%, at $16.605 an ounce, while the silver ETF, iShares Silver Trust (SLV), was little changed.
-Mark DeCambre; 415-439-6400; AskNewswires@dowjones.com
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