Gold prices have fallen to their lowest since March, with shares of precious metal miners and related exchange-traded funds posting significant losses along with them. Interest in the precious metal has weakened on the back of a rise in Treasury yields to their highest levels in 16 years, and overall strength in the U.S. dollar. That comes just five months after gold futures reached their second-highest settlement on record, at $2,055.70 on May 4.
“Investors’ ride on the ‘gold bus’ has been fun and exciting since earlier this year, but a convergence of bad news across the board emerged this week like a concrete wall, rerouting the yellow metal’s prices in retreat fashion,” Adam Koos, president at Libertas Wealth Management Group, told MarketWatch.
““Investors’ ride on the ‘gold bus’ has been fun and exciting since earlier this year, but a convergence of bad news across the board emerged this week like a concrete wall, rerouting the yellow metal’s prices in retreat fashion.””
— Adam Koos, Libertas Wealth Management Group
On Wednesday, gold for December delivery
fell $6.70, or 0.4%, to settle at $1,834.80 an ounce on Comex. Most-active gold futures have fallen to their lowest finish since March 9 — a significant drop after posting a settlement of $2,055.70 in early May, the second-highest settlement on record, according to Dow Jones Market Data. Bad news for gold investments “The cascade experienced since last week can be explained in multiple ways. The problem is, there’s not much good in between the lines,” said Koos. He pointed out that the U.S. dollar continues to surprise as it climbs further, U.S. Federal Reserve Chairman Jerome Powell and the Fed “relentlessly continue hiking rates faster and in greater distance than anything we’ve seen since World War II.” U.S. jobs data are also coming in “strong, smothering the fear trade in gold, all while yields climb to atmospheric levels, seemingly with plenty of gas in the tank,” he said. The yield on the 30-year Treasury
touched a high above 5%, though was last down at 4.875% in Wednesday dealings. The 30-year rate ended Tuesday’s session at its highest since September 2007. The yield on the 10-year Treasury
meanwhile, ended Tuesday at 4.801%, the highest since August 2007. Strength in the U.S. dollar, meanwhile, has also weighed on gold prices. The ICE U.S. Dollar index
was down 0.3% at 106.72 in Wednesday dealings, but trading up 0.5% for the week. …