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Gold Heads for Second Monthly Loss as Rising Yields Curb Demand

Published 2021-02-24, 08:13 p/m
Updated 2021-02-24, 08:54 p/m
© Reuters.

© Reuters.

(Bloomberg) -- Gold headed for a second straight monthly decline as surging bond yields damped demand for the metal which doesn’t bear interest, while investors also weighed comments from the Federal Reserve chair on growth and inflation with encouraging vaccine news.

In his second day of testimony to Congress, Jerome Powell emphasized his view that the economy has a long way to go in the recovery and signs of prices rising won’t necessarily lead to persistently high inflation. On the vaccine front, Pfizer Inc. (NYSE:PFE) and BioNTech SE’s Covid-19 shot was overwhelmingly effective against the coronavirus in a study that followed nearly 1.2 million people in Israel, results that public-health experts said show that immunizations could end the pandemic.

Bullion is down 5% in 2021 after posting its best annual gain in a decade as benchmark 10-year Treasury yields climb to the highest in a year and holdings in exchange-traded funds backed by the metal decline. Goldman Sachs Group Inc (NYSE:GS). cut its gold forecast, pointing to a rotation into riskier assets as a reason for the metal’s under-performance.

Spot gold slipped 0.1% to $1,803.81 an ounce by 7:34 a.m. in Singapore, and is 2.4% lower in February, following a 2.7% drop a month earlier. Silver fell, while platinum and palladium were little changed. The Bloomberg Dollar Spot Index was steady after retreating for five days.

©2021 Bloomberg L.P.

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