Bond yields hurt Gold but ETF buying picks up

UNITED STATES June 30 2017 7:15 PM

NEW YORK (Scrap Register): Gold has not been able to benefit from recent U.S. dollar and equity-market weakness, apparently pressured by rising bond yields instead, but exchange-traded-fund investors have used the price pullback in the metal as a buying opportunity, said Commerzbank. 

The dollar has dropped to its lowest level against the euro since May 2016, yet gold has fallen. With the currency moves, gold in euro terms has dropped to a six-month low of below €1,090 per troy ounce. Rising bond yields almost certainly have weighed on prices, Commerzbank added.

Yields on 10-year U.S. Treasury notes climbed sharply Thursday for the third consecutive day, which increases the so-called opportunity costs of holding gold. 

The current price level is clearly also viewed as an attractive buying opportunity given that the gold ETFs tracked by Bloomberg recorded inflows of nearly four tons on Thursday.

ETFs have thus seen inflows of a good nine tonnes of gold in the past three days of trading.