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Gold Slumps 1%, Falls to Two-Week Low on Rising Yields

April 23, 2018 at 16:33 by Andrew Moran

Gold futures shed more than 1% to start the trading week, falling to their lowest levels in two weeks. The decline in gold prices comes as US yields are approaching the crucial 3% threshold, which has been lifting the US dollar to its highest point since the beginning of March.

June gold futures plunged $13.80, or 1.03%, to $1,324.50 per ounce at 16:11 GMT on Monday. The yellow metal is poised to settle at its lowest level since April 11. Gold prices are also on track for their third consecutive session loss. Last week, the precious metal suffered a weekly decline of 0.6%.

Silver prices are also sliding despite rallying more than 3% last week. July silver futures plummeted $0.521, or 3.03%, to $16.70 an ounce.

Precious metals are taking a hit on a surging US dollar as the greenback rose 0.53% to 90.85. A stronger buck is generally bad for dollar-denominated commodities because foreign investors pay a higher price.

Bond yields are strengthening the greenback to kick off the trading week. The 10-year Treasury note is hovering around the important 3% mark and could finish the day at a four-year high. The 30-year Treasury bond also received a boost, climbing to 3.155%. Rising US yields are reflections of higher inflation expectations, diminishing geopolitical tensions, and dwindling trade woes. Higher yields reduce gold’s appeal, but inflation can also increase its attraction.

The market has been anticipating a rate hike in June as the Federal Reserve thinks the economy will expand and inflation will jump in the coming months. According to the CME Group FedWatch tool, the market is penciling in a 97% chance that the Federal Open Market Committee (FOMC) will raise interest rates.

Other metal commodities are in red territory. July copper futures dipped $0.018, or 0.57%, to $3.117 per pound. July platinum futures slid $7.40, or 0.79%, to $924.40 an ounce. July palladium futures cratered $51.25, or 4.97%, to $978.95 per ounce.

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