Feb 26, 2021

Gold Price Report (Morning Edition): Gold is Set for a Second Monthly Dip on Friday 26, November 2021.

 cnbc.com

Gold set for second monthly dip as high U.S. yields erode appeal

Reuters

A worker tends to gold bars at a precious metals plant.

Gold slipped on Friday and was headed for its second straight monthly decline, as U.S. Treasury yields held near a more than one-year high, eroding bullion's safe haven status.

Spot gold fell 0.3% to $1,765.06 per ounce. U.S. gold futures dropped 0.7% to $1,762.50.

"The main factor weighing on gold is the surge in bond yields, which makes gold less attractive because it doesn't pay any interest," said Commerzbank analyst Carsten Fritsch.

Bullion had dropped 1.9% on Thursday and was down 4.4% for the month so far.

The benchmark U.S. 10-year Treasury yields on Friday were hovering near an over one-year high scaled in the previous session.

While gold often benefits from expectations for more stimulus measures, given its status as an inflation hedge, government debt has turned out to be a more attractive bet for investors of late since bullion does not pay any fixed interest.

"Gold fell out of favour of investors, a clear sign you can see from continued outflows in gold exchange-traded funds (ETFs)," Fritsch said.

Holdings in the world's largest gold-backed ETF, SPDR Gold Trust , fell 0.6% on Thursday to its lowest since May 2020. "Bullion has failed to hold $1,800 and has now broken the support at $1,775, opening space for further declines," ActivTrades chief analyst Carlo Alberto De Casa said in a note.

"A strong greenback could be detrimental for gold as investors are switching back to bonds in the search for yields."

Silver slipped 1.8% to $26.92 an ounce and was poised for its first monthly decline in three, down 0.3% so far.

Palladium shed 0.8% to $2,382.50, while platinum eased 0.8% to $1,206.43.

Both the auto-catalyst metals were set to register their best month since November.

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