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Gold futures on Tuesday were edging higher as the precious metal tried to halt a string of daily losses at five, taking cues perhaps from a cooking equities market rally that had dulled some of bullion’s luster to start trade in March.
A firming U.S. dollar was causing some consternation though among gold bulls, with the expectation that gains in the currency would make the dollar-pegged yellow metal more expensive to buyers using other currencies.
The dollar was up 0.1% early Tuesday, as gauged by the ICE U.S. Dollar Index DXY, trading around 91, solidly above the index’s 50-day moving average at 90.40.
“The strength of the greenback is increasing the bearish pressure on gold, an asset traditionally negatively correlated with the Dollar Index,” wrote Carlo Alberto De Casa, chief analyst at ActivTrades, in a daily research note.
Gold for April delivery on Comex GC00, +0.25% GCJ21, +0.25% was up $2.80, or 0.2%, to reach $1,725.50 an ounce, following a 0.3% decline on Monday. Prices based on the most-active contract were trading around the lowest since June 2020 FactSet data show.
Markets have been fixated on a move in bond yields which have weighed on appetite for stocks and gold because it forces investors to assess the relative value of those assets against a regime of richer yields and rising corporate borrowing costs.
The Federal Reserve has suggested yield moves reflect upbeat expectations for an economic recovery fueled by the vaccine program and the likelihood of additional fiscal stimulus.
In other metals, May silver SIK21, -1.00% SI00, -1.00% was off 30 cents, or 1.1%, after a 0.9% gain in the previous session.
