Gold Eases as US Treasury Yields Surge to a One-Year High

Gold is moving in a bearish manner in early trading on Wednesday, with prices sliding close to a two-week low on the back of a recent strengthening in the US dollar as well as in US Treasury yields. At the time of writing, GOLD is trading at a little above $1,788.

The benchmark 10-year US Treasury yields surged to over 1.3% from 1.2%, touching the highest level in a year. Gold shares a negative correlation with bond yields as higher yields drive up the opportunity cost of holding non-yielding bullion.

Gold prices also eased lower after the US dollar strengthened on the back of optimistic data releases, which boosted hopes for economic recovery in the US. As we know, gold and the dollar enjoy a negative correlation as a stronger dollar makes it more expensive for holders of other currencies to purchase the yellow metal.

According to recent data, gold and silver mutual funds and ETFs experienced the largest outflows seen since three months during the previous week as an improvement in the risk appetite drove investors away from the safety of the precious metals and towards equities and bond markets. Later today, the precious metal could see some movement on the release of the Fed’s minutes from the latest monetary policy meeting held in January.