Gold futures struggled for direction to kick off the holiday-shortened trading week. It was relatively quiet on the economic data front, so gold traders monitored the latest Treasury auction event and the performance of the greenback. After flirting with $2,000 last week, can the yellow metal do it again before Thanksgiving?
December gold futures tumbled $4.50, or 0.23%, to $1,980.20 per ounce at 19:53 GMT on Monday on the COMEX division of the New York Mercantile Exchange. Gold prices are coming off a weekly gain of 1.5%, and they are up 8.2% year-to-date.
Silver, the sister commodity to gold, erased some of its gains in recent sessions to start the trading week. December silver futures fell $0.337, or 1.41%, to $23.515 an ounce. The white metal enjoyed a 5% weekly gain last week and is down nearly 3% so far this year.
The biggest event on Monday was the $16 billion 20-year Treasury auction. It enjoyed robust demand, with primary dealers — institutions that scoop up bonds when there is little investor demand — picking up only 10% of the issued Treasury securities.
The broader US Treasury market was mixed, as the benchmark ten-year yield slid 2.3 basis points to 4.418%. The two-year yield added one basis point to 4.917%, while the 30-year bond slumped 3.9 basis points to 4.558%.
Gold is generally sensitive to fluctuations in interest rates because it can influence the opportunity cost of holding non-yielding bullion.
The US Dollar Index (DXY), a gauge of the greenback against a basket of currencies, fell 0.46% to 103.44, from an opening of 103.82. The index plunged 2% last week and is now down 0.1% year-to-date.
A weaker buck is good for commodities priced in dollars because it makes it cheaper for foreign investors to purchase.
On the data front, The Conference Board’s Leading Economic Index (LEI) fell at a worse-than-expected pace of 0.8% in October. The LEI, a top recession indicator, has contracted by 3.3% over the six-month period between April and October.
“After a pause in September, the LEI resumed signaling recession in the near term,” Justyna Zabinska-La Monica, Senior Manager, Business Cycle Indicators, at The Conference Board, in a statement. “The Conference Board expects elevated inflation, high interest rates, and contracting consumer spending—due to depleting pandemic saving and mandatory student loan repayments—to tip the US economy into a very short recession. We forecast that real GDP will expand by just 0.8 percent in 2024.”
In other metal markets, December copper futures rose $0.0705, or 1.89%, to $3.8085 per pound. December platinum futures soared $24.20, or 2.68%, to $925.90 an ounce. December palladium futures advanced $30.10, or 2.84%, to $1,089.00 per ounce.