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Gold slips off 7-week peak as US yields gain

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Gold retreated from a more than seven-week peak on Monday as US Treasury yields gained, weighing on non-yielding bullion’s appeal and countering support from a weaker dollar.

Spot gold fell 0.3% to $1,771.40 per ounce by 12:21 p.m. EDT (1621 GMT), after touching $1,789.77, the highest since Feb. 25.

US gold futures shed 0.5% to $1,771.30.

“We’re still probably going to see gradual rise in US interest rates along with gradual steepening of the yield curve and that should take some steam out of gold,” said Daniel Ghali, TD Securities commodity strategist.

The benchmark 10-year yield rose above 1.6% after hitting a multi-week low last week.

Bullion has shed more than 6% so far this year, mostly pressured by surging US yields.

But capping gold’s declines was a weaker dollar, which slid to a more than six-week low against rivals.

“The physical market has also provided good support cushioning prices on dips below $1,700/oz. Demand in India and China has bounced back from low levels and central banks swung to net buying in February,” said Standard Chartered analyst Suki Cooper.

China, the world’s biggest gold consumer, has given domestic and international banks permission to import large amounts of gold into the country, five sources familiar with the matter said.

Among other precious metals, silver fell 0.8% to $25.75 per ounce. Platinum was little changed at $1,203.31.

Palladium rose 1.4% to $2,814.99 per ounce, after scaling to $2,845.50, the highest since February 2020.

“Palladium is set to continue to move higher owing to a recovery in automotive output, the increasing probability of rhodium to palladium substitution, and ongoing supply disruptions,” Citi research said in a note raising its 0-3 month point price forecast to $3,200 per ounce from $3,000.

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