Gold futures recorded some modest gains to kick off the trading week. The yellow metal has been trying to withstand the myriad of developments that would make it harder for gold prices to climb, particularly on the monetary policy front. But it shows the demand the public possesses for the precious metal.
June gold futures added $5.70, or 0.3%, to $1,847.80 per ounce on the COMEX division of the New York Mercantile Exchange. Gold prices are now trading at their best levels since May 11, driven by a decline in the US dollar. Year-to-date, gold is up more than 1%.
Silver, the sister commodity to gold, put together a modest gain on Monday. June silver futures rose $0.023, or 0.2%, to $21.723 per ounce. The white metal is down more than 7% on the year and more than 22% over the last 12 months.
Gold had surprisingly held its own during a rally in the broader financial markets, perhaps benefiting from a weaker greenback.
The US Dollar Index (DXY), which gauges the greenback against a basket of currencies, tumbled 0.9% to 102.11, from an opening of 102.72. A weaker buck is good for dollar-denominated commodities because it makes it cheaper for foreign investors to purchase.
But higher Treasury yields limited gold’s rally, with the benchmark 10-year at 2.859%. The one-year bill rose 2.6 basis points to 2.1026%, while the 30-year bond edged up 0.4 basis point to 3.07%.
Gold is typically sensitive to a rising-rate environment because it lifts the opportunity cost of holding non-yielding bullion.
That said, market analysts concede that gold prices have benefited from falling nominal and real rates.
“[Gold] benefited from the combination of falling interest rates (nominal and real) and a pullback in the recently relentless dollar rally,” wrote analysts at Sevens Report Research in a Monday note. “Looking ahead, gold remains in a countertrend pullback in an otherwise upward-trending market, but we will continue to watch real rates and the dollar as key influences. If they make new highs, it will be very difficult for gold to hold above $1,800.”
In other metal markets, June copper futures dipped $0.0105, or 0.24%, to $4.335 per pound. June platinum futures dropped $6.90, or 0.73%, to $943.40 an ounce. June palladium futures advanced $9.30, or 0.47%, to $1,976.00 per ounce.