Gold futures on Monday posted their first loss in four sessions, with haven demand for the metal taking a hit as U.S. equities partially bounced back from a coronavirus-triggered selloff, and the U.S. dollar and government bond yields rose.
A rise in the U.S. dollar DXY, +0.44%, gains in the Dow Jones Industrial Average DJIA, +0.54% and the S&P 500 index SPX, +0.76% as gold futures settled, as well as a climb in rates for the 10-year Treasury note TMUBMUSD10Y, +1.24% yield to as high as $1.574 on Monday helped to weigh on bullion prices, which tend to weaken when the buck strengthens and stocks rally.
Gold also competes with bond rates for haven buyers, with rising yields tending to attract investors in Treasurys and away from precious metals.
“While all eyes are on headlines about the virus, many central banks may be dovish—which lowers other currencies” even as the U.S. seems to be the “most liquid and safest for capital,” said George Gero, managing director at RBC Wealth Management. “All this is temporarily leaving gold buyers to seek other trading opportunities for now.”
Gold for April delivery GCJ20, -0.42% on Comex fell by $5.50, or nearly 0.4%, to settle at $1,582.40 an ounce, following losses in the last three consecutive sessions. Prices had drifted up to an intraday peak near $1,600, touching $1,598.50, according to FactSet data. That marked the highest intraday level since 2013.
Price losses for the metal had worsened in the wake of data released Monday that U.S. manufacturers grew their businesses in January for the first time in six months. The survey by the Institute for Supply Management rose to 50.9% last month to 47.8%.
The moves for bullion come after the most-active April contract saw a weekly climb of 0.6%, and a rise of about 3.8% for the month. The settlement level also marked the highest weekly price finish since March 2013.
China’s National Health Commission on Sunday said cases of the novel coronavirus reached 17,205, while the death toll was more than 360. Cases also have been reported outside the country, with the World Health Organization and Trump administration last week declaring public health emergencies.
The Asian influenza has drawn comparisons to SARS, or severe acute respiratory syndrome, and is expected to hurt near-term economic expansion in China, which is considered one of the biggest buyers of precious and industrial metals.
Still, gold mostly has been a beneficiary of the recent worries tied to the Asian outbreak and its potential to hurt the global economy, if only on a short-term basis.
The People’s Bank of China has injected $1.2 trillion yuan ($173 billion) into local money markets, to soften the shock from the coronavirus, among several measures enacted to help curtail sharp declines in China’s main indexes, including the Shanghai Composite Index SHCOMP, -7.72%. Chinese markets had been closed since Jan. 24 due to an extended Lunar New Year holiday.
Chinese regulators also urged banks and other financial institutions to boost lending and avoid calling in debts in areas severely affected by the pandemic.
Among other metals, March silver SIH20, -2.09% shed 34.2 cents, or 1.9%, at $17.67 an ounce, after closing Friday with a 0.1% advance, with the most-active contract finishing with a gain of 0.5% in January.
Copper futures, meanwhile, settled at their lowest level since May 2017, down a 13th straight session, which marked the longest streak of losses on record, based on data going back to November 1984, according to Dow Jones Market data.
“Factories in China have extended their new year shut down, and the longer they remain closed, the larger the curb on copper demand,” analysts at Société Générale wrote in a research note dated Monday.
March copper HGH20, -0.32% edged down 0.4% to settle at $2.507 a pound.