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Gold futures on Tuesday morning traded slightly lower as Treasury yields rose to highs not seen since early 2020 and a stronger U.S. dollar weighed on demand for gold, with global stocks were getting knocked lower.
A downturn in global stocks, with futures for the Dow Jones Industrial Average
DJIA,
YMH22,
and the S&P 500 index
SPX,
ESH22,
trading lower, were, perhaps, limiting losses for gold and silver.
February gold
GCG22,
GC00,
was trading $3, or 0.2%, to reach $1,813.10 an ounce, after the precious metal marked a 1.1% weekly advance.
Investing in gold in recent weeks has closely followed concerns about inflation and moves in the U.S. dollar, which the commodity is priced in.
Investors expect a surge in inflation will prompt the Federal Reserve to raise interest rates at least three times this year as it combats pricing pressures. Against that backdrop, the yield on the two-year Treasury note yield
TMUBMUSD02Y,
rose to 1.028%—around the highest level since February 2020, with the short-term government debt tending to be the most sensitive to expectations for higher interest rates.
Meanwhile, the benchmark 10-year Treasury note yields
TMUBMUSD10Y,
around 1.827%, representing the highest level since January 2020.
Rising rates can undercut appetite for nonyielding precious metals.
Separately, the dollar has gained 0.2%, as gauged by the ICE Dollar Index
DXY,
which measures the currency against a basket of a half-dozen others.
“The precious metal is seeing price pressure from rising government bond yields and a stronger U.S. dollar index on this day,” wrote Jim Wyckoff, senior analyst at Kitco.com, in a daily note. “Some keener risk appetite in the marketplace early this week is limiting the downside in the safe-haven metal,” he wrote.
March silver
SI00,
SIH22,
was trading 57 cents, or 2.5%, to trade at $23.48 an ounce, after gold’s sister metal rose 2.3% last week.
