Gold crumbles to 9-month low as rising bond yields, US dollar dim appeal

US gold futures settled down 0.9 per cent at US$1,700.7. PHOTO: LIANHE ZAOBAO

BENGALURU (REUTERS) - Gold slumped to a near nine-month low on Thursday (March 4) pressured by gains in the US dollar and US Treasury yields after Federal Reserve chair Jerome Powell signalled no immediate move to address the surge in bond yields.

Spot gold fell 0.9 per cent to US$1,695.26 per ounce by 2.33pm EST (1933 GMT), falling below the US$1,700 level for the first time since June 2020.

US gold futures settled down 0.9 per cent at US$1,700.7.

"Gold prices have once again come under pressure as real yields have spiked following the market's disappointment over Fed Chair Powell's comments," said Standard Chartered analyst Suki Cooper.

"Prices have dipped below US$1,700/oz and are testing the next support level at US$1,689/oz although gold is technically oversold." The recent rise in US yields have eroded gold's appeal as an inflation hedge by increasing the opportunity cost of holding non-yielding bullion.

Meanwhile, the US dollar hit a peak since December 2020.

Gold is likely to go lower from here, said Phillip Streible, chief market strategist at Blue Line Futures in Chicago.

"The ETF liquidation is still very strong too. You have too many people that bought it at these higher levels... They are eventually going to throw the towel in on it," Mr Streible added.

Holdings of the world's largest gold-backed exchange-traded fund, SPDR Gold Trust, fell to their lowest since May 2020 on Wednesday.

The US Senate is expected to begin debating President Joe Biden's US$1.9 trillion coronavirus relief package on Thursday after agreeing to phase out payments to higher-income Americans.

Meanwhile, data showed the number of Americans filing for jobless benefits rose last week.

Silver fell 3.2 per cent to US$25.24 per ounce, while palladium eased 0.3 per cent to US$2,346.19. Platinum dropped 3.7 per cent to US$1,123.49.

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