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Gold futures declined Friday morning, and were set for a third straight drop as bullion lost its perch at $1,700, amid a rise in the U.S. dollar to three month highs and a rise in U.S. Treasury yields.
“The strength of the greenback is continuing to hit gold, which has fallen below $1,700,” wrote Carlo Alberto De Casa, chief analyst at ActivTrades in a research note.
Gold for April delivery on Comex GC00, -0.61% GCJ21, -0.61% was trading $4.90, or 0.3%, lower at $1,695.40 an ounce, after it lost 0.9% on Thursday to mark the lowest settlement for the most-active contract since June 5, FactSet data show.
Silver futures SI00, -1.22% SIK21, -1.22%, meanwhile, were off 7 cents, or 0.3%, to trade at around $25.40 an ounce, after tumbling 3.5% in the previous session.
On Thursday, markets keyed off comments from Federal Reserve Chairman Jerome Powell, who said he would be concerned about a disorderly move in the bond market, but suggested that hadn’t yet had a material impact on financial conditions, disappointing some market participants who wanted him to offer more insights about tactics the central bank might employ to tamp down a rise in yields.
Instead, Powell’s comments, during a Wall Street Journal webinar, were credited with sparking a rise in the dollar and a sharp rise in bond yields.
Those factors delivered another blow to bullion and precious metals, which had already been under pressure. Higher government bond yields and a stronger dollar can make gold less attractive to investors seeking a safe-haven.
“There is a moderate switch in investors’ portfolios, with bonds gaining quota, while interest for gold is temporarily decreasing, despite a dovish speech by Jerome Powell,” De Casa wrote.
“The technical scenario for gold remains bearish, and so far there are no signs of an imminent rebound,” he wrote.
The 10-year Treasury note TMUBMUSD10Y, 1.603% was trading around 1.54%, while the U.S. dollar, as gauged by the ICE U.S. Dollar Index DXY, +0.36%, was trading up 0.3% and near its highest level since around November, FactSet data show.
