Gold on track for third straight decline

Gold was pressured Wednesday as the real, or inflation-adjusted, yield on the 10-year Treasury note briefly moved above zero for the first time since 2020. Gold had previously been largely brushing off rising yields, which raise the opportunity cost of holding a nonyielding asset.

“This week’s chorus of hawkish Federal Reserve comments and a return to positive real rates have reduced the appeal of both gold and silver,” analysts at Zaner wrote in Thursday’s newsletter.

The two metals also fell as a “precipitous decline in the dollar has had little cushioning influence for prices,” highlighting a “serious lack of buying interest on the sidelines,” they said.

Still, gold has been underpinned by haven-related demand as Russia’s invasion of Ukraine grinds on.

Moscow said it submitted a draft of its demands for ending the war, while the U.S. and its allies raced to supply Ukraine with heavier weapons to counter the Russian offensive in Ukraine’s industrial east. Britain’s Defense Ministry said in an assessment that Russia likely wants to demonstrate significant successes ahead of its annual May 9 Victory Day celebrations.

Gold is likely to remain supported as traders eye the May 9 holiday in Russia, said Stephen Innes of SPI Asset Management, in a note.

“Many are expecting a significant surge in the conflict around this time — there’s increasing pressure on Russia to turn the tide in the war around this important holiday. We should expect more sanctions to be announced by allies in the coming days, which should be favorable for gold via the supply chain and inflation channels,” he wrote.

In other Comex metals trade, May copper
HGK22,
+0.92%
tacked on 1.2% to $4.707 a pound. July platinum
PLN22,
-1.89%
shed 1% to $977.60 an ounce and June palladium
PAM22,
-1.55%
traded at $2,425.50 an ounce, down 1.5%.