Gold futures lost ground Tuesday, extending their September pullback, to trade below the psychologically significant $1,500-an-ounce level as a continued rebound by bond yields dulled the metal’s appeal.
Gold for December delivery GCZ19, -0.48% on Comex was off $11.30, or 0.7%, to trade at $1,499.80 an ounce, with the most-active contract slipping back below $1,500 for the first time since Aug. 12, according to FactSet. December silver SIZ19, -0.53% fell 16.7 cents, or 1%, to $18 an ounce.
Concerns about the U.S.-China trade battle appear to have moved to the back burner for investors after being blamed for volatile market action in August. U.S. Treasury Secretary Steven Mnuchin on Monday told Fox Business that he views renewed discussions with Beijing as a sign of good faith.
“It has been a negative start to the week for gold with prices dipping below $1,500 on the back of renewed U.S.-China trade optimism,” said Lukman Otunuga, senior research analyst at FXTM, in a note. “While the precious metal has scope to weaken further in the near term, the downside will most likely be limited by lower interest rates across the world as central banks join the global easing train.”
The European Central Bank is expected to deliver further monetary stimulus when it meets later this week, while the Federal Reserve is widely expected to deliver another interest rate cut when it meets later this month.
Investors were shunning Treasurys, another traditional haven, with yields on the rise. Gold had rallied in August and early September to hit a string of more-than-six year highs on haven-related flows that lifted the yellow metal and knocked down bond yields. Lower yields are seen as a boon for gold, lowering the opportunity cost of holding the non-yielding metal.
December copper HGZ19, -0.53% fell 1% to $2.6025 a pound.
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