Gold extends slide as yields jump before wave of inflation data

Silver, platinum and palladium declined.
Image: Akos Stiller/Bloomberg

Gold extended its longest run of weekly losses this year as investors eyed rising Treasury yields — and a stronger dollar — ahead of a flurry of inflation figures due from major economies in coming days.

Bullion has been sliding since mid-April as the Federal Reserve and other central banks tighten policy to fight rising consumer prices. The monetary squeeze has sent yields on US government bonds past 3% and fueled five weeks of gains for the dollar, making non-interest bearing gold less attractive.

There could be more bond-market swings to come as a swathe of inflation data feeds the debate on price pressures and monetary policy. US consumer prices are released on Wednesday, with China, India, Mexico and Brazil also reporting during the week.

Investors also digested trade data from China on Monday that showed the damage caused by Covid-19 lockdowns in the world’s second-biggest economy. The nation’s exports and imports struggled in April as worsening virus outbreaks cut demand, undermined production and disrupted logistics.

“Persistent strength in the US dollar and higher bond yields amid expectations that the Fed may continue with aggressive rate hikes to get inflation under control” is weighing on gold, said Ravindra Rao, the head of commodity research at Kotak Securities Ltd. However, the downside is limited on increasing concerns relating to China, inflationary worries and tensions over Russia’s invasion of Ukraine, he said.

Gold fell 1.1% to $1862.93 an ounce by 11:13 a.m. in London, adding to three weeks of losses. The dollar rose 0.4%, extending gains to a third day. Silver, platinum and palladium declined.

© 2022 Bloomberg

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