Gold edges lower as Treasury yields bounce

Gold futures lost ground Wednesday, slipping back below the $1,800-an-ounce threshold as U.S. Treasury yields continued to bounce off five-month lows.

Gold for August delivery

fell $15, or 0.8%, to $1,796.40 an ounce on Comex. September silver
edged up 1 cent to $25.005 an ounce.

The yield on the 10-year Treasury note
which dipped to a five-month low on Monday, continued to rebound, rising 3.5 basis points to 1.241%. Higher bond yields raise the opportunity cost of holding assets that don’t offer yields.

That said, ‘the previous much more pronounced decline in yields had hardly affected the gold price at all,” noted analysts at Commerzbank, in a note.

“For now at least, the fact that yields are still at absurdly low levels, especially by comparison with current inflation and inflation expectations, and that real yields based on inflation expectations are still well below -1%, appears not to be playing any role,” they said.

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