Gold slips as traders turn their attention to equities

Bengaluru — Gold eased on Tuesday, after hitting a one-month high in the previous session, as a slight recovery in share markets and US Treasury yields reduced some of the precious metal’s safe-haven appeal.

Spot gold was down 0.2% at $1,319.86/oz as of 4.26 GMT, after touching its highest since February 28 at $1,324.33/oz in the previous session.

US gold futures were down 0.2% at $1,319.80/oz.

“Though concerns have gone up, we are not 100% sure there is going to be a recession as the yield curve inversion should be there for a whole quarter and not just for a day or two,” said John Sharma, economist at the National Australian Bank.

The 10-year US Treasury yield fell below the yield for three-month bills on Friday for the first time since 2007, inverting the yield curve. An inversion is widely seen as an indicator of an economic recession.

However, Asian shares bounced back on Tuesday as US 10-year Treasury yields edged higher, but the outlook remained murky as investors weighed the odds of whether the US economy is in danger of slipping into recession.

“Risk of a US economic slowdown has gone up and interest rates are on hold, which is giving some stimulus to gold, but it’s not enough to sky rocket gold prices. Investors need more confirmation of further weakness in the economy,” Sharma said.

Chicago Federal Reserve Bank president Charles Evans said on Monday it was understandable for markets to be nervous when the yield curve flattened, though he was still confident about the US economic growth outlook.

The US Federal Reserve last week abandoned projections for any interest rate hikes this year.

Gold has gained about 3% so far this year, mainly on the back of a dovish Fed and concerns about a global economic slowdown.

Market participants are also keeping a close watch on the latest round of China-US trade negotiations, scheduled to start on Thursday in Beijing, and the next Brexit vote.

British legislators will now vote on a range of Brexit options on Wednesday, giving parliament a chance to indicate whether it can agree on a deal with closer ties to Brussels.

Any positive developments from either of the geopolitical issues will weigh on gold prices as investors appetite for riskier assets will rise, denting bullion’s safe-haven appeal.

Among other precious metals, palladium slipped 0.1% to $1,575/oz, after touching its lowest in two weeks at $1,532.56/oz in the previous session.

Silver was flat at $15.54/oz, while platinum dipped 0.2% to $853.45/oz. 

Reuters