Gold, on Monday, May 21, hit a new low for the year after U.S. Treasury Secretary Steven Mnuchin
declared that a trade war between China and the United States was “on hold”, sparking a rally in stocks and the dollar.
Buoyancy in U.S. Treasury yields also weighed on appetite for non-interest bearing assets such as bullion, analysts said.
Spot gold fell to its lowest since late December at $1,281.76 an ounce, and by 0935 GMT was down 0.5 percent at $1,284.70 an ounce. U.S. gold futures for June delivery were 0.6 percent lower at $1,283.80.
“The dollar’s riding high, and the 10-year yield has broken above 3.05 percent for the first time since 2011,” Mitsubishi analyst Jonathan Butler said. “This is taking place at a time when we’re very close to all-time highs in the U.S. equity markets, and all of this positive news about jobs, about productivity, is feeding into a move towards risky assets.”
He said gold could benefit from safe-haven buying in the long run if that exuberance loses steam and inflation pressures mount.
Gold prices fell below the psychologically important level of $1,300 an ounce last week, and posted the first weekly close below their 200-day moving average since late December.
The metal is also being weighed down by expectations that U.S. Federal Reserve will lift U.S. interest rates again next month, further hurting demand for non-yielding assets.
Hedge funds and money managers cut their net long position in COMEX gold contracts by 21,294 contracts to 31,327 in the week to May 15, data showed on Friday.
Among other precious metals, platinum was down 0.3 percent at $879.80 an ounce, after also marking a fresh low for the year in earlier trade at $873.50.
Silver was down 0.6 percent at $16.33 an ounce, while palladium , the most industrial of the major precious
metals, was up 0.7 percent at $969.72 an ounce, bucking the falling trend.
