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Metals Stocks: Gold prices inch higher amid weaker dollar, bond yields

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Gold futures inch higher on Tuesday, getting a lift from weakness in the U.S. dollar and a retreat in Treasury yields, but prices haven’t been able to recoup their loss from the previous session.

“The gold trade has not been overly focused on physical demand, with the market instead alternating between interest rates, currency and reflation issues,” analysts at brokerage firm Zaner wrote in a Tuesday note.

“In the near term, gold is likely to be vulnerable to the Indian demand threat and to rising U.S. rates, but cushioned by weakness in the dollar and perhaps to a lesser degree by relation psychology,” they said. Gold is often viewed as a hedge against inflation.

The 10-year Treasury note’s yield
BX:TMUBMUSD10Y
was down at around 1.57%. A fall in government debt yields can boost appetite for precious metals which don’t offer a coupon.

The moves for bullion also came as the dollar was steady at 91.088, but trading down for the week as well as the month, as gauged by the ICE U.S. Dollar index DXY. Weakness in the buck can make dollar-priced commodities more appealing for overseas buyers.

June gold 
GC00,
+0.49%

GCM21,
+0.49%

edged up by $5.70, or 0.3%, at $1,776.30 an ounce, after declining 0.5% a day ago. Prices on Friday had settled at $1,780.20, their highest since Feb. 24.

Analysts at Zaner pointed out news that Chinese gold imports reached high a 14-year high, with “March imports the highest since the first month the world became aware of the virus problems inside China.”

China has also announced it would allow large banks and financial institutions to import large quantities of gold, and that “policy change ‘opens up’ China to the type of ‘wild West’ import capacity seen in a very long list of physical commodities over the last several years,” they said.

Meanwhile, silver for May delivery
SIK21,
+0.51%

traded at $25.89 an ounce, up 5.3 cents, or 0.2%, after declining 1% on Monday.

The moves for precious metals come amid renewed worries about a re-emergence of COVID-19 in parts of the globe, including India, where the outbreak has pushed the country to the second-highest infection rate in the world.

Rounding out action on Comex, May copper
HGK21,
-0.12%

fell by 0.2% to $4.23 a pound. July platinum
PLN21,
-0.84%

lost 1.5% to $1,188.60 an ounce and June palladium
PAM21,
-2.01%

declined by 3% to $2,728 an ounce after settling at a record high on Monday.

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