Gold -0.7% from New Yuan, Euro, UK Records as Yields Rise with the Dollar
Monday, 1/13/2025 15:11
GOLD fell on Monday after hitting fresh record prices in both Euros and UK Pounds, as the US Dollar climbed to a 26-month high and US government bond yields rose to the highest since late-2023 on 10-year Treasury debt,
writes Atsuko Whitehouse at BullionVault.
Global stocks on the MSCI All Countries Weighted Index slid to the lowest since September, extending Friday's sell-off in US tech firms.
Bullion in No.1 gold consumer China meantime set a new record high in Chinese Yuan, fixing near ¥637 per gram at Shanghai's benchmarking auction, as Beijing's 30-year borrowing costs held close to the New Year's record low of 1.80% per annum in the bond market.
Gold for Eurozone investors set a new all-time high of €2637 per Troy ounce while
Sterling gold prices reached a record £2218 per ounce before also slipping back 0.7% and dropping beneath £2200.
Today's new record highs came as the EUR and GBP currencies fell to their lowest levels against USD since October 2022 and February 2023 respectively.
By mid-afternoon in London, spot gold in Dollar terms fell 0.6% from Friday's finish to $2671 per ounce after gaining 1.5% last week and adding nearly 3.0% since the end of 2024.
Still 4.2% off
Halloween's all-time Dollar-gold peak, bullion's rally has come despite the US currency's DXY Dollar Index – a measure of its value against other Western currencies – rising yet again, adding 0.4% on Monday to breach 110 for the first time since October 2022.
"Gold keeps rising,
even with the collapse in the Treasury market," says strategist Otavia Costa at $250m Denver, Colorado hedge fund Crescat.
Bond yields rise when bond prices fall, and US Treasury debt prices were
hit sharply on Friday following better-than-expected US jobs market data for December.
Ten-year US Treasury yields – a benchmark rate for government and commercial borrowing – rose another 4 basis points on Monday to 4.80%, marking a 15-month high and a 22-basis point increase so far this year.
The last time the benchmark yield reached this level, in October 2023, gold bullion was trading at $1996 per ounce – 34.5% below Monday's price.
"The historical dynamic between bond yields and gold remains aberrant," says German refining group Heraeus in a weekly note.
Historically, gold prices showed
a negative correlation against bond yields, rising when interest rates fell. However, this relationship has weakened as markets prepare for President-elect Donald Trump to take office and implement his economic policies.
"Investors appear to be bracing for renewed uncertainty as Trump takes office and implements his economic policies," says Daniel Hynes, senior commodity strategist at Australasian bank ANZ.
"We've entered a new era where gold stands out as the ultimate defensive asset and inflation hedge," says Costa at Crescat.
Inflation on the latest US producer price index will be released tomorrow, followed by the consumer price index on Wednesday. Analysts forecast an annual rise of 3.4% and 2.8% respectively.
Silver prices on Monday tracked and extended gold's retreat, falling 2.2% against the Dollar to $29.72 per ounce and erasing four-fifths of last week's gains to near 1-month highs.
Oil prices, however, rallied to a 5-month high on Monday as fresh US sanctions against Russia raised supply concerns, posing a fresh threat to inflation.
Market expectations for the US Federal Reserve to make no cuts to overnight interest rates in 2025 have now risen to 1-in-3, up from less than 1-in-10 just a month ago, according to the CME Group's
FedWatch tool.
Email us
