Gold dips as US bonds yields rise
Chicago (Feb 10) Gold prices have fallen, as investors pushed up yields on US government bonds on expectations that the Federal Reserve would raise interest rates later in 2015.
Gold for April delivery, the most actively traded contract, closed down $US9.30, or 0.8 per cent, at $US1,232.20 a troy ounce on the Comex division of the New York Mercantile Exchange.
The yield on the benchmark 10-year US government bond rose above two per cent for the first time in a month on Tuesday. Investors have been taking their chips off the table from the haven bond market, anxious about US monetary-policy tightening, which is expected to happen in the second half of 2015. Friday's strong employment number for January bolstered expectations that the Fed will raise rates sooner rather than later.
Rising interest rates are bad news for gold, which has no payouts for its holders and struggles to compete with interest-bearing investments during times of tighter monetary policy.
"It's becoming more realistic to believe that the Fed could move in September or possibly as early as June," Dave Meger, director of metals trading at High Ridge Futures, said.
"Gold ... is not going to do well in that environment."
Investors will also be keeping an eye on talks between Greece's newly elected government and the country's European creditors, set to begin on Wednesday. Any indication that Greece may be moving closer to defaulting on its debt or exiting the European Union would likely lift demand for gold, an asset that some investors buy in times of economic or political uncertainty.
Other precious metals fell in gold's wake, with platinum shedding 1.1 per cent to close at $US1207.30 a troy ounce, the lowest level since January 9.