Futures & Commodities

Gold scales 3-1/2 month peak on subdued stocks, U.S. yields

Share
Key Points
  • Spot gold jumped 1.3% to $1,866.84 per ounce by 1:50 p.m. EDT (1750 GMT), after hitting its highest since Feb. 1 at $1,868.26.
  • U.S. gold futures settled up 1.6% at $1,867.60.
A one kilo Swiss gold bar and US dollars gold coins are pictured in Paris on February 20, 2020.
JOEL SAGET| AFP via Getty Images

Gold prices climbed on Monday to their highest in more than three months, with the precious metal appealing to cautious investors as U.S. Treasury yields remained subdued even as stock prices fell on inflation worries.

Spot gold jumped 1.3% to $1,866.84 per ounce by 1:50 p.m. EDT (1750 GMT), after hitting its highest since Feb. 1 at $1,868.26. U.S. gold futures settled up 1.6% at $1,867.60.

"There's a flight to safety out of the equity markets ... and anticipation that we're going to continue to see inflation numbers trend much stronger going forward," said Jeffrey Sica, founder of Circle Squared Alternative Investments.

"The Treasury yields will stay about where they are, and that's going to further increase the likelihood of investors choosing gold."

Global equity markets paused as inflation pressures tempered demand for riskier assets. Data last week showed U.S. producer prices rose more than expected in April.

Benchmark U.S. 10-year Treasury yields were subdued, reducing the opportunity cost of holding non-interest bearing gold.

Investors now await minutes of the U.S. Federal Reserve's last meeting, due on Wednesday, for more cues on the U.S. central bank's monetary policy and any comments on inflation.

"The Fed is going to continue to hold on to the notion that the increase in inflation has to do more with the reopening of the economies than to do with any real inflation," Sica said.

Gold is seen as a hedge against rising inflation.

On a technical note, the gold market has breached the 200-day moving average and that was supporting prices further, said Eli Tesfaye, senior market strategist at RJO Futures.

Elsewhere, platinum rose 1.1% to $1,238.41 per ounce.

The World Platinum Investment Council said the global platinum market will be more undersupplied this year than it previously thought.

Palladium rose 0.3% to $2,899.78, while silver rose 2.7% to $28.15, having earlier hit its highest since Feb. 23 at $28.20.