Gold eyes lowest finish in 9 weeks as investors sidestep the metal for more attractive safe havens
Gold futures on Monday headed for their lowest finish since late February, with the traditional haven failing to find support as investors dumped equities and other assets perceived as risky while jumping into other assets perceived as safe, including U.S. Treasurys and other government bonds.
Gold for June delivery GC00,
May silver SIK22,
Gold was “unable to benefit much from the renewed flight to safety that’s gripped the markets since Friday,” said Raffi Boyadjian, lead investment analyst at XM, in a note.
“Investors appear to be fleeing to the safety of the world’s reserve currency and U.S. Treasurys rather than the traditional safe haven, gold,” he wrote. “Treasury yields were weaker across the curve today, but they remained elevated as the Fed is expected to front load its rate hikes in the coming months.”
U.S. benchmark stock indexes saw another round of losses after a steep Friday selloff that saw the Dow Jones Industrial Average DJIA,
“Gold’s inability to benefit from falling stock markets is a reflection of how difficult it will be for gold to make significant gains given the interest rate outlook outlined by the Federal Reserve last week,” said Rupert Rowling, market analyst at Kinesis Money, in a daily note.
With interest-rate hikes by the U.S .central bank now “all but guaranteed in both May and June and highly likely in July too, this has given support to the U.S. dollar and made gold a much less attractive asset to hold given its lack of yield,” he said.
The ICE U.S. Dollar Index DXY,
A rise in Treasury yields pushed the rate on the 10-year note TMUBMUSD10Y,
In other Comex metals trading, July copper HGN22,
“A clean sweep of negative outside market influences has put the [palladium] market on the defensive,” analysts at Zaner wrote in Monday’s newsletter. “Adding to the selling mentality in palladium is a worsening infection situation in China…and that is exaggerated by the shift into a global tightening environment.”