Gold Slides as US Bond Yields Rise
Gold edged lower early on Wednesday as United States (US) bond yields rose and geopolitical worries eased as US House Speaker Nancy Pelosi ended her visit to Taiwan, checking the metal’s return to the US$1,800 mark it flirted with a day earlier.
Gold for December delivery was last seen down US$1.80 to US$1,787.90 per ounce, according to data from commodities markets. The drop comes as US House Speaker Nancy Pelosi visited Taiwan despite China’s objections, with the Asian power boosting military activity around Taiwan to show its displeasure with Pelosi’s move but offering little other resistance.
MarketForces Africa reported that Pelosi flew out of Tapei on Wednesday which some analysts believe would likely sever ties between the two economic giants.
“Gold … likely gave back the gains it had been accumulating ahead of Pelosi’s visit to Taiwan and the upsurge in geopolitical tensions due to that, but there is further room for geopolitical rivalry as China announced military drills and missile tests, suggesting we can still have more bouts of gold strength,” Saxo Bank noted on its website.
Bond yields rose early on Wednesday, bearish for gold since it offers no interest. The yield on the US 10-year note was last seen up 3.8 basis points to 2.788%. Risk aversion explains low yields. Analysts think there was a credible undercurrent of poor economic news driving government bond yields lower in the recent rally.
The macro mood music is equally unpleasant on both sides of the Atlantic with the important distinction that Europe’s woes owe in large part to geopolitics, and more specifically to Russian gas flows, ING Economics said in a note.
The dollar edged down, with the ICE dollar index last seen down 0.01 to 106.23 points. A lower dollar makes gold more affordable for international buyers. # Gold Slides as US Bond Yields Rise