Futures & Commodities

Gold pares gains on firmer yields, upbeat U.S. earnings

Key Points
  • Silver hits over one-month high
  • U.S. dollar dips as bonds stabilize
  • Palladium jumps 4%
This photo shows gold bars stacked in rows.
Ktsdesign | Science Photo Library

Gold prices pared gains on Tuesday, after rising more than 1% earlier, as their safe-haven appeal took a knock from rising U.S. Treasury yields and upbeat earnings from American companies.

Spot gold was up 0.3% at $1,769.94 per ounce by 1:31 p.m. ET (1731 GMT). It rose as much as 1.2% earlier in the session on a weaker dollar that makes precious metals cheaper for holders of other currencies.

U.S. gold futures for December settled up 0.3% at $1,770.5.

"There's not much conviction on bullion right now," said Edward Moya, a senior market analyst at brokerage OANDA.

"We don't know exactly if we are going to see any major shifts from the Federal Reserve. You're seeing earnings, for the most part, impress, and that's been the primary driver to keep risk appetite strong."

Wall Street rose on Tuesday, aided by upbeat results from Johnson & Johnson and insurer Travelers.

Diminishing the appeal of gold, which is non-yielding, U.S. benchmark 10-year Treasury yields hit their highest level since early June at 1.6302%.

Market participants are increasingly expecting the Fed to start tapering its asset purchases soon, as the earnings season has been encouraging so far and recent data showed a solid increase in U.S. consumer prices.

Reduced stimulus and interest rate hikes tend to drive up government bond yields, raising bullion's opportunity cost.

Among other precious metals, platinum rose 0.6% to $1,041.50 per ounce and palladium jumped 4.2% to $2,100.15 per ounce.

Spot silver surged 2.7% to $23.80 per ounce and touched a more than one-month high.

Along with platinum and palladium likely being helped by short-covering, "there is some expectation that the chip shortage has potentially peaked," UBS analyst Giovanni Staunovo said. "If data shows that's the case, we should get some improvement on the car production side."