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Metals Stocks: Gold, silver slip as 10-year Treasury yield nears 4%


Gold and silver prices slipped on Wednesday as U.S. Treasury yields edged higher, with the yield on the 10-year note nearing 4%.

Price action

Gold for December

delivery shed $9.30, or 0.6%, to $1,676.30 per ounce on Comex.

Silver for December

delivery declined 31 cents, or 1.6%, to $19.19 per ounce.

December palladium futures

for December delivery climbed $4.10, or 0.2%, to $2,154 per ounce, while platinum futures

for January delivery fell $7.10, or 0.8%, to $892 per ounce.

Copper for December delivery

fell 3 cents, or 0.8%, to $3.44 per pound.

What’s happening

Ole Hansen, chief commodity strategist at Saxobank, said in a note Wednesday that fluctuations in Treasury yields and the value of the dollar have taken gold and other commodities on a “rollercoaster ride” in recent weeks.

“Commodity markets continue to attract a great deal of directional inspiration from the price action across financial markets,” he said.

The yield on the 10-year Treasury note

rose 2.2 basis points to 3.958% on Wednesday. The ICE U.S. Dollar Index
a gauge of the dollar’s strength against a basket of rival currencies, was flat at 113.23.

However, there’s still reason to be long gold, Hansen said, citing the risk of a Federal Reserve policy “mistake” that could provoke a reversal in stocks, bonds and the dollar.

“Looking ahead we see no reason to change our long-term bullish view on gold with support potentially coming from the risk of a policy mistake sending US economic growth, the dollar and bond yields lower,” he said.

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