Gold futures finished lower on Monday, with strength in the U.S. stock market led by gains in technology stocks partly to blame for the metal’s fall from last week’s highest settlement since late February.
A collapse in the Turkish lira also contributed to losses for gold, with the weaker currency likely to dull the yellow metal’s demand from Turkey, which is a major buyer, analysts said. A report from the World Gold Council in January showed that Turkey was the biggest annual gold buyer in 2020, adding 134.5 metric tons to its official gold reserves.
Against the backdrop, gold for April delivery
fell $3.60, or 0.2%, to settle at $1,738.10 an ounce, after prices saw a 1.3% weekly rise put in on Friday—the second weekly gain in a row. Prices on Friday also finished at the highest for a most-active contract finish since Feb. 25.
Bullion’s move lower to start the week comes even as U.S. Treasury yields and the dollar are staging a modest pullback that would ordinarily offer a runway for gold prices.
The 10-year Treasury note
was down at around 1.679%, compared with 1.729% on Friday, while one measure of the dollar was off 0.2%, as measured by the ICE U.S. Dollar Index
Commodity experts speculated that gold prices were facing selling pressure, nonetheless, because investors were favoring equities as the rise in bond yields appeared to stabilize somewhat. The technology-heavy Nasdaq Composite Index
led the rise on Monday.
Broader commodity markets rallied “after taking fright at the rise in borrowing costs spurred by their own bull market,” Adrian Ash, director of research at BullionVault, told MarketWatch. That can contribute to losses for haven gold.
Meanwhile, May silver
fell 55 cents, or 2.1%, to settle at $25.77 an ounce, following last week’s 1.5% weekly climb. Based on the most-active contracts, prices saw their lowest settlement since March 8, FactSet data show.
Silver, as well as platinum, took their cue from gold Wednesday, “slipping with the yellow metal amid the central-bank turmoil” in Turkey, a key gold buyer, said Ash.
Turkey’s currency and stocks collapsed after the abrupt termination of its central bank head.
In related news Monday, Federal Reserve Chairman Jerome Powell said during a webinar sponsored by the Bank for International Settlements that bitcoin is essentially more of a substitute for gold than the dollar. With bitcoin expected to continue its surge, that could bode ill for gold.