Investing.com – Metal prices fell Monday as dollar steadied and U.S. bond yields surged pressuring gold to session lows.
0Gold futures for August delivery on the Comex division of the New York Mercantile Exchange rose by $6.00 or 0.49%, to $1,255.10 a troy ounce from a session low of $1,215.50.
Gold prices gave up overnight gains as rising U.S. bond yields helped the dollar steady, reducing demand for the pressure metal.
The United States 10-Year yields rallied over 2% on the back of surge in Japan 10-Year bond yields following reports the Bank of Japan (BoJ) was discussing changes to its policies in a bid to combat stubbornly low inflation.
Analysts, however, downplayed the likelihood that the BoJ would tweak monetary policy at its next policy meeting next week, as concerns by some at the BoJ about the side-effects of ultra-lose monetary policy like low inflation don't justify any change in the policy stance.
“We aren’t convinced that those concerns justify any change in the policy stance at the moment, but it is worth asking whether they could become more pressing issues in future,” said Marcel Thieliant, senior Japan economist at Capital Economics.
The U.S. dollar index, which measures the greenback against a trade-weighted basket of six major currencies, rose by 0.20% to 94.45. That dollar index had traded as low as 93.98 intraday.
Gold is sensitive to moves higher in both bond yields and the U.S. dollar. A stronger dollar makes gold more expensive for holders of foreign currency while a rise in U.S. rates, lift the opportunity cost of holding gold as it pays no interest.
Gold had started the week on the front foot as safe-haven demand edged higher after President Donald Trump hit back against his Iranian counterpart Hassan Rouhani, who said hostile U.S. policies towards Tehran could lead to "the mother of all wars."
The wider metals traded mostly lower as aluminium prices held gains but copper, zinc and nickel futures remained under pressure as investors continued to fret U.S-China trade-war tensions after U.S. Treasury Secretary Steven Mnuchin said further sanctions on China could come into effect.
"It’s definitely a realistic possibility” Mnuchin said of Trump following through on a threat to impose tariffs on all $500 billion worth of goods the U.S. imports from China each year.
Copper prices fell 0.47% to $2.74, while zinc prices fell 1.25% to 2,552.25.
Aluminium prices rose 0.88% to 2,063.50, while Nickel futures fell 1.05% to 13,372.50.
Silver futures fell 0.89% to $15.41 a troy ounce, while platinum futures rose 0.47% to $833.40.