Gold prices slump following jump in US Treasury yields

🗝️ Key Points

• Gold prices slumped on Tuesday morning, following a jump in US government bond yields, known as Treasurys.
• Gold futures (GC=F) slid 1.3% to $4,220.50 per ounce at the time of writing on Friday morning, while spot gold fell nearly 1% to $4,191.79 an ounce.
• Read more: London stocks slip as Bank of England flags AI-driven valuation risks Bonds sold off globally on Monday, driving up yields, after Bank of Japan governor Kazuo Ueda.

Gold prices slumped on Tuesday morning, following a jump in US government bond yields, known as Treasurys.

Gold futures (GC=F) slid 1.3% to $4,220.50 per ounce at the time of writing on Friday morning, while spot gold fell nearly 1% to $4,191.79 an ounce.

Read more: London stocks slip as Bank of England flags AI-driven valuation risks

Bonds sold off globally on Monday, driving up yields, after Bank of Japan governor Kazuo Ueda signalled that the central bank could raise interest rates in December.

The sell-off in Japanese government bonds, following Ueda’s hawkish comments, spread to other markets, including the US.

The rise in US Treasury yields dented the appeal of holding gold, given it is a non-yielding asset.

The pound dipped against the dollar (GBPUSD=X) on Tuesday, to trade at $1.3185 at the of writing, as investors kept an eye on US economic data.

On Monday, the US Institute for Supply Management (ISM) reported that manufacturing activity fell by 0.5% month-over-month, taking November’s index reading to 48.2% It marked the ninth consecutive month of contraction for the industry.

Matt Britzman, senior equity analyst at Hargreaves Lansdown, said that a quiet earnings calendar and sparse economic data has left kept the tone in the US stock market “subdued, leaving investors looking ahead to Friday’s delayed PCE [personal consumption expenditures] inflation report”.

“With [Federal Reserve] rate-cut odds for next week sitting at 86%, inflation data could be the spark everyone’s waiting for, if it’s supportive of further cuts,” he said.

Meanwhile, the pound was little changed against the euro (GBPEUR=X) on Tuesday morning, trading at €1.1362 at the time of writing.

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Data released on Tuesday showed that eurozone inflation is expected to have edged up to 2.2% in November, up from 2.1% in October, according to a flash estimate from Eurostat.

Professor Joe Nellis, economic adviser at accountancy and advisory firm MHA, said: “For the wider eurozone economy, today’s data suggests that the disinflation trend is intact but still fragile. Growth across the bloc remains modest, with forecasts for next year centred near 1.2%.”

“This combination – cool inflation but weak activity – places the ECB in a delicate position,” he said. “Policymakers may feel more comfortable that inflation is bending in the right direction, yet the persistence of services-led price pressure makes a toward aggressive rate cuts unlikely.”

Oil prices dipped on Tuesday, as investors weighed different factors influencing supply dynamics in the market.

Brent crude (BZ=F) futures declined 0.1% to $63.08 per barrel at the time of writing, while West Texas Intermediate futures (CL=F) were steady at $59.29 a barrel.

Over the weekend, the Organization of the Petroleum Exporting Countries and allies – known as OPEC+ – reiterated plans to pause output hikes until early 2026.

Read more: Trending tickers: Apple, Synopsys, MongoDB, Beyond Meat and On The Beach

Meanwhile, investors were also keeping an eye on developments around Russia-Ukraine peace talks. Signs of progress on talks to end the war in Ukraine has raised expectations that this could lead to sanctions being lifted on Russia, resulting in more of its oil supplies coming back onto the market.

More broadly, the FTSE 100 (^FTSE) rose 0.3% in early European trading to 9,728 points. For more details on market movements check our live coverage here.

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