Gold Declines With Yields Rising After Manufacturing Reports

Gold Declines With Yields Rising After Manufacturing Reports

(Bloomberg) — Gold headed for the first decline in three sessions as bond yields rose after a string of positive economic readings helped spur optimism in the recovery from the pandemic.

The yield on the benchmark 10-year Treasury rose two basis points, hurting demand for non-interest-bearing bullion.

Gold gave up gains after U.S. manufacturing data topped estimates, fueling concern the Federal Reserve might have to consider tighter policy sooner than anticipated. In May, bullion wiped out losses for the year with a 7.8% advance over the month, helped by patchy economic data and signs of accelerating inflation that boosted demand for the metal as a store of value.

“There’s been decent selling in gold in solid volume this morning,” said Tai Wong, head of metals derivatives trading at BMO Capital Markets. “A surge in yields so far today has encouraged some profit-taking and pushed gold briefly back under $1,900” an ounce, he said.

Spot gold fell 0.3% to $1,901.80 an ounce by 2:49 p.m. in New York. Platinum and palladium advanced, while silver was little changed. Gold futures for August delivery slipped less than 0.1% to settle at $1,905 an ounce on the Comex.

Investors have been returning to exchange-traded funds backed by bullion, a major driver of last year’s gold rally. Money managers have also increased their net bullish gold bets, CFTC data on futures and options show.“Momentum in the gold market remains strong, with investor inflows picking up sharply,” Australia & New Zealand Banking Group Ltd. said in an emailed note.

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