Black Friday is Now! Don’t miss out on up to 60% OFF InvestingProCLAIM SALE

PRECIOUS-Gold, silver slump as U.S. political risks fade, yields gain

Published 2021-01-08, 11:31 a/m
© Reuters.
XAU/USD
-
XAG/USD
-
GC
-
SI
-
PA
-
PL
-
US10YT=X
-
DXY
-

* Silver falls as much as 9.8%

* Palladium set for worst week since November

* Interactive graphic tracking global spread of coronavirus: https://tmsnrt.rs/3mvcUoa (Recasts, adds comments, updates prices)

By Shreyansi Singh

Jan 8 (Reuters) - Gold slumped more than 4% on Friday and silver followed with a near 10% plunge as prospects for a smooth transition of power in Washington and a jump in U.S. Treasury yields hammered the precious complex.

Spot gold XAU= fell as low as $1,828.36 and was last down 3.6% at $1,843.06 per ounce at 2:45 p.m. EST (1945 GMT), en route to register its worst week since November. U.S. gold futures GCv1 settled down 4.1% to $1,835.40.

"Gold is having a major fundamental shift for many investors and they're starting to abandon their safe haven trade," said Edward Moya, senior market analyst at OANDA.

"You're probably going to see that the Treasury market sees some strong flows and that's taking away some of the appeal from gold."

Democrat control of the U.S. Senate has raised bets for large stimulus, lifting the benchmark 10-year bond yield US10YT=RR to its highest since March. U.S. President Donald Trump has agreed to an orderly transition of power, there's been some "temporary profit-taking," said Jeffrey Sica, founder of Circle Squared Alternative Investments. US/ gold broke below $1,900, some of the momentum traders continued to execute sell orders."

While gold has generally been seen as a hedge against the inflation that could result from widespread stimulus, especially last year, that has changed as higher bond yields increase the opportunity cost of holding non-interest yielding bullion. US/

"We're going to see a lot more of stimulus and that ultimately moved interest rates higher," said Bart Melek, head of commodity strategies at TD Securities.

Some analysts also said a few investors could have also diverted funds to Bitcoin, which has extended a meteoric rally. XAG= slid 7.3% at $25.14 per ounce, after falling as much as 9.8%, while palladium XPD= eased 2.6% to $2,356.23 per ounce. Both metals were set to face their worst week since November.

Platinum XPT= dipped 5% to $1,060.87, paring an earlier 6.2% drop.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.