Small losses for gold with competition from bonds

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Gold ended its trading session with small losses, as the increase in bond yields during the day was competitive with the precious metal.

In particular, gold for August delivery traded at $ 1,852.8 an ounce, down 0.2% or $ 3.7.

The ECB’s announcement that it was ending its current bond-buying program, announcing – as expected – a 0.25% interest rate hike at its next meeting in July, put significant pressure on the bond market, but mainly in Europe as US securities quickly weighed the profits they showed.

In general, the ECB appeared without surprises for investors, following the mild attitude expected by the market, which indicates that the demand for gold does not run a significant risk in time from a shift in government securities.

As WisdomTree’s Nitesh Shah points out, “the ECB shows that it intends to raise interest rates, but not very aggressively, and that’s what the market holds.”

According to him, “a possible escalation in the inflation front is always an opportunity for moves in gold, but on the other hand the Fed reacts to these numbers and the market expects successive increases in interest rates by 0.5%, which will work to compensate. “.

In any case, investors indicate that they will wait for the new data of the consumer price index tomorrow to decide more clearly how to move.

The 10-year US yield, however, remained stable above 3% today, significantly reducing interest in gold.

It is recalled that the upward movement in bonds usually works in competition with the precious metal as they offer a stable return, despite the fact that gold is generally considered the safe haven for investment.

On the other metals, silver moved 1.3% and saw its price fall to $ 21.8 an ounce.

Palladium lost 1% to $ 1,919, copper fell 1.6% to $ 4.38 a pound, while platinum fell 3.6% to $ 975.


Source: Capital

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