Gold futures settled lower on Wednesday, pressured by a rise in U.S. Treasury yields, but showed little reaction to the latest comments on monetary policy and the outlook for the economy from Federal Reserve Chairman Jerome Powell.
Prices then moved lower after the central bank’s Beige Book report showed a moderate acceleration in the economy.
Meanwhile, bitcoin, one of gold’s biggest rivals as a safe haven, hit a fresh record, with the hotly anticipated cryptoplatform Coinbase Global
COIN,
debuting on the Nasdaq.
Gold “continues to build a base below $1,750,” after rejecting a second drop to $1,675 per ounce, said Adrian Ash, director of research at BullionVault. “We could be stuck going sideways here for as long as the base-effect of last spring’s Covid crash in commodity prices continues skewing annual inflation data.”
For example, the sharpest import/export inflation for 10 years “might be expected to give gold and silver a lift, but not if it whacks fixed income and drives bond yields higher,” he told MarketWatch. Tuesday’s move higher for gold prices “on the strong 30-year auction demand shows that gold is being led more by yields than cost of living forecasts.”
U.S. Treasury note yields moved higher Wednesday, with the 10-year Treasury note yield
BX:TMUBMUSD10Y
up 1.5 basis points at 1.64%. Rising bond yields can dull the luster of gold, which offers no yield.
Still, Naeem Aslam, analyst at AvaTrade, said gold is still maintaining an upward momentum as concerns about the Fed dialing back accommodative policies are overblown, pointing to a regime of lower interest rates for longer that would benefit bullion.
“The Fed has assured investors and traders that they aren’t going to change the sailing path of their monetary policy, and further clarification of this is going to come when Jerome Powell speaks later today,” Aslam wrote.
At the Economic Club of Washington Wednesday, Powell said the Fed would taper asset purchases well before any interest rate increase, but offered no date for a shift in policy.
Against that backdrop, June gold
GCM21,
GC00,
fell $11.30, or nearly 0.7%, to settle at $1,736.30 an ounce on Comex.
Gold prices then moved lower in electronic trading to $1,735.20 shortly after the Fed Beige Book release.
Prices pulled back Wednesday after posting a gain Tuesday, when data showing U.S. consumer prices in March rose for the fourth month in a row boosted the metal’s appeal as a hedge against inflation.
Gold’s moves on Wednesday came as bitcoin
BTCUSD,
touched a record near $65,000, with the digital asset seen by some as a competitor to gold and perhaps drawing some flows away from the haven asset. The rally in bitcoin came as Coinbase Global
COIN,
began trading on the Nasdaq under the symbol “COIN.” The digital platform was given a reference price of $250 a share late on Tuesday evening.
BullionVault’s Ash, however, believes that “crypto plainly offers no portfolio hedge or history of crisis insurance. Anyone buying bitcoin for the reasons they might have bought gold was missing the point on precious to start with.”
Meanwhile, among other metals traded on Comex Wednesday, May silver
SI00,
SIK21,
tacked on 0.4%, to end at $25.52 an ounce. May copper
HGK21,
rose 2.4% to $4.13 a pound, with prices up a second session to mark the highest finish since April 5, according to Dow Jones Market Data.
July platinum
PLN21,
also rose almost 1.8% to $1,177.40 an ounce, but June palladium
PAM21,
shed nearly 0.7% to $2,679.40 an ounce.