Gold slides to 7-month low as strong yields sap appeal

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A worker tends to gold bars at a precious metals plant.

Andrew Rudakov | Bloomberg | Getty Images

Gold prices fell to a seven-month trough on Friday, extending its seven-day long streak of declines, as rallying U.S. Treasury yields drove investors away from the non-interest bearing precious metal.

Spot gold fell 0.2% to $1,772.91 per ounce by 0945 GMT, falling for a seventh consecutive session, which was last seen in November 2018.

The metal touched its lowest since July 2 at $1,759.29 earlier in the session and have declined over 2.7% so far this week. U.S. gold futures fell 0.1% to $1,772.70.

“As long as yields move higher, the market is simply going to struggle to find a footing,” said Saxo Bank analyst Ole Hansen, adding that if the metal fails to hold the $1,765 level, a further downward moves could be likely.

Benchmark U.S. Treasury yields remain pinned near one-year high hit earlier this week, prompting investors to dump bullion, which pays no interest, in favor of traditional risk assets.

An unexpected rise in U.S. jobless claims that undermined recovery hopes also failed to keep the safe-haven metal afloat.

But, analysts say gold should still benefit from continued loose monetary policy and low real interest rates this year.

Commerzbank analysts said in a note that gold’s behavior resembled that of a tsunami with the water receding in the first phase (the gold price falling) and then coming back all the more violently (the gold price rising significantly).

Autocatalyst metal platinum fell 0.6% to $1,267.11, but was set to post its third straight weekly gain, having hit a six-year peak earlier in the week.

Platinum ‘s demand and supply balance will depend on investment demand in the near term, Saxo’s Hansen said.

“If the ongoing overall reflation focus supporting commodities with a tight and a green theme attached to it continues, then platinum will continue to attract investment demand.”

Meanwhile, palladium gained 0.1% to $2,353.00 an ounce and silver rose 0.3% to $27.09, and was set for its biggest weekly decline since mid-January, falling 0.9%.

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