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Metals Stocks: Gold scores back-to-back gains even as the dollar, bond yields rise

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Gold prices scored back-to-back gains Wednesday, despite modest gains in other haven plays, including the strong dollar and the 10-year Treasury yield as it pushed back above the 3% threshold.

Price action

Gold futures expiring in August
GCQ22,
+0.27%

rose 0.2%, or $4.40, to settle at $1,856.50 per ounce on Comex.

Silver
SIN22,
-0.42%

SI00 futures expiring in July shed 0.4%, or 9 cents, to close at $22.09.

Platinum
PLN22,
-0.39%

PL00 expiring in July shed 0.1% to settle at $1011.60.

Palladium futures
PAU22,
-1.83%

lost 1.4% to close at $1,937.80.

In the industrial metals space, copper
HGN22,
+0.17%

HG00,
+0.17%

for July deliver rose 0.2% to settle at $4.45.

What market participants are saying

A strong dollar
DXY,
+0.19%

and higher Treasury yields
TMUBMUSD10Y,
3.024%

— most notably the 10-year Treasury yield, which was holding above 3% — were blamed for stealing some of the shine from precious metals and keeping a lid on gold.

“There are a lot of different factors keeping gold prices down, but stable,” said William Cai, co-founder of Wilshire Phoenix, which oversees the wShares Enhanced Gold ETF
WGLD,
+0.69%
.
What happens next with inflation likely influences the trajectory of the dollar and stocks, he said, but also holds sway over gold.

“It’s not in its own bubble,” Cai said, in a phone interview. But he sees positive signs since gold prices “bounced off the $1,800 level, and currently are consolidating, in this price range, looking for direction.”

Gold competes with the dollar and Treasuries as a “safe haven” asset, and higher Treasury yields tend to make bonds a more attractive choice.

“Yellow metal traders at mid-week are seeing the bullish elements of higher crude oil prices and a still-wobbly U.S. stock market, but also the bearish aspects of rising bond yields and a recent rebound in the U.S. dollar index,” said Jim Wyckoff, senior analyst at Kitco.

As for the U.S. dollar
USDJPY,
+1.13%
,
it climbed to a new multi-decade high against the Japanese yen, with one dollar buying more than 134 yen as of Wednesday.

Gold closed modestly higher on Tuesday.

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