Gold Falls as U.S. Dollar, Yields Rise

Investing.com – Gold was lower on Monday, weighed down by a strengthening U.S. dollar and a rise in U.S. Treasury yields.

The , which measures the greenback’s strength against a basket of six major currencies, rose 0.51% to 90.54 as of 10:57 AM ET (14:57 GMT).

The dollar surged to a seven-week high, boosted by a rise in U.S bond yields. Bond yields have risen to their highest levels in four years, as inflation has added to expectations of continued rate hikes from the Federal Reserve.

Gold is denominated in the U.S. currency and becomes more expensive for holders of other currencies when the dollar rises.

Comex for June delivery were down 0.96% to $1,325.40 a troy ounce.

The yield on the benchmark United States 10-Year Treasury note reached its highest level since January 2014 on Monday, at 2.975. The United States 2-Year note rose to 2.474, a level not seen since September 2008.

Expectations of higher interest rates tend to boost the dollar by making the currency more attractive to yield-seeking investors.

Higher rates are a negative for gold as the precious metal, which does not pay interest, struggles to compete with yield-bearing assets when rates rise.

Meanwhile, geopolitical risks seemed to ease somewhat over the weekend.

North Korea said on Saturday it was suspending nuclear and missile tests and scrapping its nuclear test site ahead of planned summits with South Korea and the U.S. Gold is often sought by investors as a store of value in times of market turmoil and political tensions and tends to decline as investor confidence returns.

Elsewhere on the Comex, were down 2.73% to $16.695 a troy ounce. Among other precious metals, platinum fell 0.60% to $926.20, while palladium slumped 5.55% to $973.00 an ounce. futures decreased 0.80% to $3.110 a pound.

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