Futures for gold on Monday were fighting for loft to start March, with the precious metal attempting to avoid a fifth straight drop after contracts on Friday put in the sharpest monthly slump in four years spurred at least partly by a steady rise in government bond yields.
Stabilization in the rise of yields, which climb as debt prices fall, were helping to momentarily renew some appetite for bullion, dealers said.
However, experts cautioned that any rebound for the yellow metal would be perhaps fleeting, against the backdrop of a rally in the equity market, gains in the U.S. dollar and the approval of Johnson & Johnson’s JNJ, -2.64% one-shot vaccine, which appeared to be buttressing risk-taking on Wall Street.
“Gold futures prices are moderately up in early U.S. trading Monday, on a corrective rebound after last Friday hitting an eight-month low,” wrote Jim Wyckoff, senior analyst at Kitco.com. “However, buying interest in the yellow metal will likely be squelched today by rallying U.S. stock indexes and a firmer U.S. dollar index,” the analyst wrote in a Monday note.
Gold for April delivery on Comex GC00, +0.48% GCJ21, +0.48% was up $4.65, or 0.3%, at $1,733.30 an ounce, hanging around its lowest finish since June 2020, according to Dow Jones Market Data.
Monday’s move comes after gold, based on the most-active contract, saw a weekly decline of about 2.7% and a loss of 6.6% for the month, which was its largest monthly fall since November of 2016.
The 10-year benchmark Treasury note, touched a yield around 1.55% last Friday but was around 1.44% on Monday.
Meanwhile, the dollar, as gauged by the ICE U.S. Dollar index DXY, +0.17% was up 0.2%.
A firmer dollar, which most commodities are priced in, and rising yields can make gold less appealing to buyers comparing the haven asset against yield-bearing investments that are perceived as safe. Gold doesn’t offer a coupon.
Separately, May silver SI00, +2.21% SIK22, -0.33% was adding 54 cents, or 2.1%, to trade around $26.98 an ounce, after prices on Friday marked a 3% weekly loss, and 1.8% monthly decline.
The Federal Reserve has suggested the climb in yields reflects upbeat expectations for an economic recovery fueled by the vaccine program and the likelihood of additional fiscal stimulus.
The Centers for Disease Control and Prevention over the weekend approved the use of J&J COVID vaccine after the Food and Drug Administration also green lighted the virus remedy.
Meanwhile, the House passed the Biden administration’s $1.9 trillion COVID-19 relief package.
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