Gold Holds Firm as Bond Yields Rise to Four-Month Highs

Investing.com — Gold prices stayed resilient on Thursday, sticking stubbornly around the $1,480 mark despite the poor performance of other haven assets such as U.S. Treasury bonds.

The 10-year U.S. benchmark note is now yielding 1.94%, only three basis points below what would be its highest mark since President Donald Trump’s escalation of the trade war with China back at the end of July.

By 10:45 AM ET (1545 GMT), gold futures for delivery on the Comex exchange were at $1,480.10 a troy ounce, up 0.1% on the day. Spot gold was also up 0.1% at $1,476.33.

Silver futures were up in line at $17.07 an ounce, while platinum futures were up slightly more, by 0.2%, at $938.05.

Gold futures are still around 3% above where they were in that fateful week, but that is not a stellar return over the three months, given that the Federal Reserve has cut interest rates three times since then, by a total of 75 basis points.

The CFTC’s figures show that net long positions held by traders have basically plateaued since August, which, coupled with a falling off of central bank purchases, has made it all-but impossible for the yellow metal to build on its first-half rally.

Przemyslaw Radomski, an analyst with Sunshine Profits in New York, argued that, while it briefly posted a new all-time high in euro prices in September, gold’s failure to hold those gains augurs badly for the coming months.

“Back in 2012, when gold also tried to break above the previous high … and failed, it also declined at a relatively slow pace initially. That didn’t prevent gold from declining very rapidly in the following months,” Radomski said in a column for Investing.com.

Euro-denominated prices are an interesting alternative way of looking at gold because much of the portfolio money that has flowed into gold this year has come from Europe, where negative interest rates have nullified the traditional advantage over gold of bonds and savings accounts. The European Central Bank has so far shown little interest in ending its experiment with negative interest rates – in contrast to Sweden’s Riksbank, which raised its key rate to 0% from -0.25% at its policy meeting on Thursday.

The Bank of England, meanwhile, said it was too early to tell whether the general election last week, which all-but ensured the U.K. will leave the EU in January, had significantly affected the economic outlook. Ahead of the meeting, some economists had argued that the economy would still need monetary stimulus from lower rates next year.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.