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Gold hits fresh 2018 low as rising yields lift dollar

Reuters  |  NEW YORK/LONDON 

By and Maytaal Angel

NEW YORK/LONDON (Reuters) - Gold slid more than 1 percent on Tuesday, falling for a third day to hit its lowest this year as a rise in U.S. borrowing costs pushed up the dollar and overshadowed the impact of strife in

Downward momentum in gold picked up after the broke below support at its 200-day moving average at $1,306 an ounce. That firmly underpinned prices earlier this month.

Spot gold lost 1.6 percent at $1,290.91 an ounce by 1:35 p.m. EDT (1735 GMT), earlier hitting its lowest since late December at $1,289.40. U.S. gold futures for June delivery settled down $27.90, or 2.12 percent, at $1,290.30 per ounce.

Israeli troops shot dead dozens of Palestinian protesters on the border Monday when the high-profile opening of the to in by the raised tension to a boiling point.

But gold investors were fixated on the U.S. dollar, which rose versus a currency basket as 10-year U.S. bond yields shot above 3 percent, sending borrowing costs higher in a number of other countries.

"It's a risk-off play across the board. The downward slide in pretty much all commodities and equities, you can refer that to a stronger dollar and higher yields," said David Meger, trading at High Ridge Futures.

A Federal Reserve official backed the case for further U.S. interest rate hikes, saying inflation had not yet reached the U.S. central bank's 2 percent goal in a sustained way.

Higher U.S. interest rates tend to boost the dollar and bond yields, making greenback-denominated gold more expensive for holders of other currencies and denting the appeal of non-yielding assets such as bullion.

"The market's been waiting for the next rate hike by the Fed ... and I think gold prices are going to remain under pressure till we get through that hike," said in a note.

However if yields were to ease, bullion could recover lost ground over the coming days, said. "Otherwise the only hope for dollar-denominated gold is a potential correction in the greenback now."

Silver declined 1.5 percent at $16.26 an ounce, earlier hitting its lowest in nearly two weeks at $16.18 an ounce.

lost 1.2 percent at $893.99 per ounce, falling to a 1-1/2-week low of $892.24 per ounce.

Palladium dropped 1 percent at $986 an ounce, earlier dipping to a one-week low of $964. It broke support at its 200-day moving average at $988 an ounce.

(Additional reporting by in London and Apeksha Nair in Bengaluru; Editing by and Alistair Bell)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Tue, May 15 2018. 23:25 IST