Gold futures lost ground Tuesday, with the yellow metal on track for a second straight monthly loss after a surge by the U.S. dollar in May.
Gold for August delivery GC00, -0.30% GCQ22, -0.30% was down $5.20, or 0.3%, at $1,852.10 an ounce, on track for a 3.1% monthly fall based on the most actively traded contract. July silver SIN22, -1.88% fell 33.6 cents, or 1.5%, to $21.76 an ounce and was off 5.7% for the month.
Gold was facing a headwind “from the firmer U.S. dollar and significantly rising bond yields,” said Daniel Briesemann, commodity analyst at Commerzbank, in a Tuesday note. A stronger dollar is a negative for commodities priced in the unit, making them more expensive to users of other currencies, while rising Treasury yields raise the opportunity cost of holding a nonyielding asset.
Both gold and yields were moving higher after Federal Reserve Gov. Christopher Waller on Monday said he was in favor of 50 basis point, or half a percentage point, rate increases over the next “several meetings.” That’s in comparison to Fed Chair Jerome Powell, who has said half-point moves were on the table for half-point moves at the next two meetings followed by reflection and a possible slowdown to quarter-point increases.
“I support tightening policy by another 50 basis points for several meetings,” he said, in a speech in Frankfurt. “I am not taking 50 basis-point hikes off the table until I see inflation coming down closer to our 2% target. And, by the end of this year, I support having the policy rate at a level above neutral so that it is reducing demand for products and labor, bringing it more in line with supply and thus helping rein in inflation,” said Waller, who has been among the most hawkish Fed officials.
The ICE U.S. Dollar Index DXY, +0.26%, a measure of the currency against a basket of six major rivals, rose 0.3%. The index was on track for a 1% monthly fall after hitting a nearly 20-year high in early May.
The yield on the 10-year Treasury note TMUBMUSD10Y, 2.822% was up 6 basis points near 2.80%. The yield jumped above 3.2% in intraday trade, a 3 1/2-year high, in early May before pulling back over the past three weeks.
President Joe Biden will meet with Powell on Tuesday. In a guest column in The Wall Street Journal, Biden said he would stand aside and let the Fed do its job — but also put the blame for rising prices on the institution. The latest inflation data shows prices rising at a pace not seen in about 40 years, though both the consumer-price index and the PCE price index have eased from their peaks.
In other metals trade, July copper HGN22, +0.55% rose 0.5% to $4.3275 a pound.
July platinum PLN22, +1.05% rose 1.2% to $954.70 an ounce, while September palladium PAU22, -0.43% fell 0.4% to $2,046 an ounce.
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