CUR - Gold tumbles to lowest since March as U.S. yields hit fresh June highs

2023-06-07 15:33:18 ET

Gold futures sank to their lowest in two-and-a-half months on Wednesday, as U.S. Treasury yields settled at their highest levels of the month and signaling rate hiking cycles likely are not ready to end.

The Bank of Canada's surprise decision to raise interest rates by 25 basis points, continuing its tightening campaign after a five-month pause, "sent a shiver down the spine of most gold bulls, as they are the leading central bank when it comes to action since COVID-19," Oanda's Edward Moya wrote, "which means today's message that more hikes are coming is resetting many peak terminal rate bets."

Front-month Comex gold ( XAUUSD:CUR ) for June delivery closed -1.1% to $1,942.70/oz, its lowest settlement value since March 21, while June silver ( XAGUSD:CUR ) finished -0.5% at $23.439/oz.

ETFs: ( NYSEARCA: GLD ), ( NYSEARCA: GDX ), ( GDXJ ), ( IAU ), ( NUGT ), ( PHYS ), ( GLDM ), ( AAAU ), ( SGOL ), ( BAR ), ( OUNZ )

Gold demand will drop ~9% this year with central banks' appetite falling from last year's all-time high , consultancy Metals Focus said, adding that gold prices will be under pressure in this year's H2.

Net official sector purchases more than doubled last year to a record high of 1,083 metric tons and are due to fall but remain at a historically strong 600 tons in 2023, Metals Focus said in its annual Gold Focus report.

The consultancy forecasts gold supply will rise 2% Y/Y to 4,881 metric tons this year with higher mine production, recycling and return of hedging by miners, while demand slips 9% to 4,375 tons.

More on gold and gold mining:

• Gold: Inflation And Standard Deviation
• GDX: Even A Small Fall In Gold Prices Would Turn Free Cash Flows Negative
• UBS Sees Three Reasons To Buy Gold, With Drop Below $2,000 An Opportunity

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