Gold Gains as Treasury Yields Edge Down

By Georgi Kantchev

LONDON--Gold prices edged higher Wednesday along with other metals as the dollar's recent rally stalled and benchmark U.S. government bond yields fell.

The precious metal rose 0.2% to $1,292.70 a troy ounce. Copper, meanwhile, was up 0.2% at $6,823.50 a metric ton in midmorning trade.

The U.S. dollar's resurgence took a pause from its monthlong rally on Wednesday. The WSJ Dollar Index, which measures the currency against a basket of 16 others, was last down less than 0.1%. It is up nearly 4% in the past month.

Recent rises in U.S. Treasury yields have also been putting pressure on gold. The metal pays no interest so it looks less attractive against yield-bearing assets when rates rise.

After staging its sharpest one-day gain since March 2017 on Tuesday, the yield on U.S. 10-year Treasurys was last at 3.059%, down from 3.082% late the previous day. Yields move inversely to prices.

"We still see the U.S. rate cycle and U.S. dollar in the driving seat for gold," Carsten Menke, commodities research analyst at Julius Baer, wrote in a note to clients.

Mr. Menke, however, expects gold's prospects to improve later in the year as the "short-term rate cycle headwinds fade as the year progresses, opening up medium- to longer-term buying opportunities."

Other analysts are also bullish on gold's outlook given continuing geopolitical tensions, including U.S. and China trade negotiations, the coming North Korea summit and rising risks in the Middle East.

"The impact of rising bond yields has severely diminished the strength of the precious metal though fundamental support levels will be expected to materialize amidst existing geopolitical issues," Benjamin Lu, analyst at Phillip Futures, wrote in a note to clients.

Among base metals, zinc was up 0.7% at $3,080 a metric ton, aluminum rose 0.2% to $2,329 a metric ton, tin was down 0.2% at $20.835 a metric ton, nickel was down 0.1% to $14,465 a metric ton and lead fell 0.1% to $2,354 a metric ton.

Among precious metals, silver was down 0.1% at $16.26 a troy ounce, platinum rose 0.1% to $897.70 a troy ounce and palladium was down 0.8% to $975.40.

Write to Georgi Kantchev at [email protected]