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Gold futures were trading lower Tuesday morning, at risk of halting a three-session advance, as a climb in yields for government debt and a stronger dollar combined to knock the precious metal lower, in what has mostly been mostly bumpy but rangebound trading.
December gold
GCZ21,
GC00,
was trading $12.70, or 0.7%, lower at $1,754.80 an ounce, after rising 0.5% a day ago.
Monday’s gains for gold were at least partly attributed to tensions between China and Taiwan, which boosted safe-haven demand for the precious metal. Over the weekend, the U.S. said it was concerned by “provocative” actions by China after Taiwan claimed that 93 Chinese military plans flew into its air defense zone over the last three days, according to a report from BBC News.
In addition, investors also were on edge as U.S. Trade Representative. Katherine Tai, on Monday, outlined trade policy with China that is viewed largely as building on that initiated by former President Donald Trump, who launched the biggest trade war since the 1930s in an attempt to get China to buy more U.S. goods and to stop it from pressuring American companies to hand over their trade secrets.
“Gold prices rallied after US trade representative Tai threw down the gauntlet against China for not living up to their parts of the phase-one trade deal,” wrote Edward Moya, senior market analyst at Oanda Corp., in a late-Monday research note.
However, gold also likely drew some safe-haven bids as U.S. stocks saw sharp declines Monday, raising worries that a slide in risky asset prices may be deepening as the Federal Reserve is seen preparing to soon end monthly bond purchases that have supported a lower-yield regime and emboldened risk taking.
Silver for December delivery
SIZ21,
SI00,
was of 13 cents, or 0.6%, to $22.21 an ounce, following a 0.5% gain on Monday.
Upward momentum for precious metals was fading Tuesday though as the 10-year Treasury note
TMUBMUSD10Y,
yields 1.499%, up from 1.481% on Monday, while the U.S. dollar was up 0.2%, as gauged by the ICE U.S. Dollar Index
DXY,
Richer yields can undercut appetite for nonyielding precious metals and a stronger dollar makes the dollar-priced commodities more expensive to overseas buyers.
