By Polina Devitt
LONDON (Reuters) – Gold prices fell on Tuesday, under pressure from high U.S. Treasury yields and as investors locked in profits from a rally that drove the precious metal to a record peak last week.
Spot gold was down 0.4% to $2,372.27 per ounce by 1109 GMT. The metal rose 1.7% on Monday and touched an all-time high of $2,431.29 on Friday.
The yield on 10-year Treasury notes was last at 4.64% after surging to a five-month high of 4.66% on Monday after U.S. retail sales increased more than expected in March. This prompted the market to increase bets on fewer U.S. rate cuts in 2024. [US/] [FRX/] [FEDWATCH]
“Although the long-term correlation between the two (gold and the Treasury yields) seems to have been abandoned, over the short term it still influences,” said independent analyst Ross Norman. “Higher-for-longer is one of the biggest headwinds in an otherwise very positive landscape for gold.”
Gold is up 15% so far this year after its March-April rally, driven by expectations for sustained inflation, safe-haven demand amid geopolitical tensions in the Middle East and strong purchases by central banks.
“This gold rally looks far from done,” Norman added.
Analysts at Citi expect gold to regularly test and breach $2,500 in the second half of 2024 and to hit $3,000 per ounce over the next six-18 months.
“Gold is operating in a new paradigm, there are participants hedging against all kinds of risk and some new stakeholders have appeared, by the look of it. It is still looking as if the buy-on-dips mentality is here to stay, at least for now,” said StoneX analyst Rhona O’Connell.
Correcting in tandem with gold, spot silver fell 2.0% to $28.31 per ounce, platinum was down 0.1% to $968.85, and palladium lost 1.7% to $1,018.00.
“Platinum and palladium have been benefiting from some industrial interest but this looks to have waned for now,” O’Connell added.
(Reporting by Polina Devitt in London; additional reporting by Sherin Elizabeth Varghese in Bengaluru; Editing by Tasim Zahid and Barbara Lewis)
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