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Gold Surges Despite Equities Rebound, Rising Treasury Yields

February 12, 2018 at 17:56 by Andrew Moran

Gold futures are surging to kick off the trading week, despite the equities market posting triple-digit gains. The yellow metal is looking to rebound from its second consecutive weekly loss as it is on track to record its biggest one-day gain in nearly a month.

April gold futures rose $11.40, or 0.87%, to $1,327.10 per ounce at 16:39 GMT on Monday. Gold prices are poised for their largest one-day dollar and percentage increase since January. This comes as the precious metal posted its second straight weekly loss last week.

Silver, the sister commodity to gold, is also rallying to start the trading week. March silver futures climbed $0.41, or 2.58%, to $16.55 an ounce. The white metal suffered a weekly loss last week, too.

Precious metals are rebounding despite the equities market soaring after a roller coaster week. Gold is further benefiting from a weaker US dollar as the greenback shed 0.07% — the US dollar had initially risen on Monday before paring those gains. A lower greenback is good for dollar-denominated commodities like gold and silver because it makes it cheaper for foreign investors to acquire.

US Treasury note yields declined from their recent highs. The 10-year benchmark Treasury yield advanced 0.38%, but it pulled back from a four-year high of 2.90%. Gold is generally sensitive to rising yields because bullion does not produce a yield, but with inflation on the rise, traders are taking on the investment as a hedge against inflation.

With traders taking profits in gold long positions to cover margin money calls, gold is likely to benefit moving forward from a more stable global stock market. Investors will continue to pour money into the yellow metal to rival stock market volatility since there is very little need to meet margin calls.

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