Gold falls as investors shun precious metals for more attractive safe havens

Gold futures fell on Monday, with the traditional haven finding no support as investors dumped stocks and other perceived risky assets while buying into other perceived safe-haven assets, including US Treasuries and other government bonds.

gold for June delivery GC00,
-1.34%

GCM22,
-1.34%
fell $17.70, or 0.9%, on the Comex to $1,916.40 an ounce. The yellow metal fell 2.1% last week after consecutive weekly gains. May Silver SIK22,
-2.74%
fell 63.4 cents, or 2.6%, to $23.625 an ounce. Silver was down 5.6% weekly on Friday, the largest such decline for a most actively traded contract since the week ended January 28th.

Gold “has not benefited much from the renewed flight to safety that has gripped markets since Friday,” Raffi Boyadjian, senior investment analyst at XM, said in a statement.

“Investors appear to be fleeing to the safety of the world’s reserve currency and US Treasuries rather than the traditional safe haven of gold,” he wrote. “Treasury yields were weaker along the curve today but remained elevated on expectations that the Fed will frontload rate hikes in the coming months.”

Stock index futures pointed to another round of losses for US stocks after a sharp sell-off on Friday that saw the Dow Jones Industrial Average DJIA,
-2.82%
Ends nearly 1,000 points lower, posting largest single-day percentage drop since October 2020.

A surge in Treasury yields that pushed down the interest rate on the TMUBMUSD10Y 10-year note,
2.821%
to levels seen last week in December 2018 as investors planned an increasingly aggressive Federal Reserve response to inflation at its highest level in four decades. Yields, which are moving in the opposite direction of prices, tumbled on Monday as investors crowded into the haven as broader COVID-19 lockdowns in China put additional pressure on global equities and a plunge in a number of Commodities, including oil futures, triggered.

The flight to quality, meanwhile, lifted an already strong US dollar. The ICE US Dollar Index DXY,
+0.36%,
a measure of the currency against a basket of six major peers, rose 0.5% to its highest level since March 2020. A stronger dollar may weigh on commodities rated in the unit, making them more expensive for users of other currencies.

https://www.marketwatch.com/story/gold-falls-as-investors-sidestep-precious-metal-for-more-attractive-safe-havens-11650885559?rss=1&siteid=rss Gold falls as investors shun precious metals for more attractive safe havens

Brian Lowry

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