Metals Stocks: Gold prices slip as stocks, U.S. dollar and yields rise

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Gold futures were slipping early Wednesday, with the precious metal relinquishing some of the modest recovery from the previous session amid a trifecta of headwinds: a stronger U.S. dollar, rising stocks and higher bond yields.

“Higher yields in the US are continuing to provide some support for the dollar which, in turn, is keeping gold prices under pressure,” wrote Craig Erlam, senior market analyst at Oanda, in a Wednesday note.

“Gold enjoyed some mild reprieve yesterday but continues to hover near its three month lows,” the analyst wrote.

Persistent optimism about the prospects of cures and treatments for COVID-19 has, at least momentarily, overshadowed a rapid acceleration in cases in the U.S. and elsewhere in the world, which would normally underpin a rise in bullion and its sister metal silver, dealers said.

The global tally for confirmed cases of the novel strain of coronavirus that causes COVID-19 climbed to 51.5 million on Wednesday, according to data aggregated by Johns Hopkins University, while the death toll rose to 1.3 million. The U.S. has the highest case tally in the world at 10.3 million and highest death toll at 239,695 or about a fifth of the global totals.

Still, global stocks were mostly higher early Wednesday, with the Dow Jones Industrial Average DJIA, +0.90% poised to reach near a record high, detracting from appetite for haven gold.

A rise in yields near 1%, with the 10-year Treasury note TMUBMUSD10Y, 0.979% holding near 0.98% as of late Tuesday, and a firming of the U.S. dollar, as gauged by the ICE U.S. Dollar Index DXY, +0.38%, up 0.4%, were also serving as points of resistance for gold price gains in the short term.

The U.S. bond market is closed in observance of Veterans Day.

A stronger dollar can make commodities priced in the currency less attractive to overseas buyers and rising yields also undercut the relative value of gold and silver, which don’t offer a coupon.

Against that backdrop, December gold GCZ20, -0.93% was off $7.10, or 0.4%, to trade at $1,869.30 an ounce, after rising 1.2% on Tuesday, which helped the metal recover from a 5% tumble on Monday.

Silver futures for December delivery SIZ20, -2.33% shed 25 cents, or 1%, to reach $24.21 an ounce, following a 3.2% gain in the precious and industrial metal in the previous session.

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