Gold futures on Monday settled lower for a third session in a row, touching the lowest level in nearly five weeks, as the commodity has been buffeted by a strengthening dollar and gains in the benchmark Treasury note.
June gold GCM8, +0.17% was down $14.30, or 1.1%, to $1,324 an ounce, marking its lowest finish since March 21 and its worst daily drop since April 12, according to FactSet data. The three-session skid is the lengthiest since a similar downturn ended March 16. The yellow metal hit a 2 1/2 -month high of $1,360 as recently as April 11.
Last week, gold futures fell by roughly 0.7%, the first such loss in three weeks.
May silver SIK8, +0.29% tumbled 57.6 cents, or 3.4%, to $16.587 an ounce on Monday, pulling back from its own 2 1/2 -month high hit last week. The decline represented the sharpest daily fall since July 3, 2017 and its longest losing trend since mid March. The contract saw a 3% gain for last week.
"Despite commodities prices pulling strongly higher in recent sessions, the gold price has failed to partake," said Richard Perry, market analyst with Hantec Markets. "Increased inflationary expectations should be supportive for gold, which is often seen as an inflationary hedge, but the stronger dollar has certainly had a bigger negative impact on gold."
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Perry pegged near-term support for gold prices at $1,321, now that the metal has dropped below support at $1,333.50.
The ICE U.S. Dollar Index DXY, +0.07% was up 0.6% at 90.72. Its gain lowers the appeal of dollar-priced commodities, including gold, to investors using other currencies.
Bond yields, which are reflecting a rise in inflation expectations, were on the march higher Monday, a continuation of gains logged last week. The 10-year Treasury note yield TMUBMUSD10Y, -0.12%TMUBMUSD10Y, -0.12%TMUBMUSD10Y, -0.12%TMUBMUSD10Y, -0.12%hovered around 2.984% on Monday, after jumping to 2.956% on Friday, for the highest level since January 2014.
The rise in U.S. interest rates has come as traders increasingly start to price in four interest-rate hikes in 2018 from the Federal Reserve, rather than the three signaled by policy makers. On Friday, traders on the fed-fund futures market saw a 38% chance of four hikes this year, compared with 24.5% on April. 11.
Higher yields can dull the investment appeal of nonyielding bullion. It is also true that accelerating inflation can eventually lure investors into the shelter of fiat gold, meaning bond market moves tend to have mixed implications for the metal. So far, however, rising yields have driven gold lower.
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Hopes of denuclearization of the North Korean Peninsula, following Pyongyang's announcement over the weekend that the country will close its nuclear test site and suspend long-range missile tests, dulled haven demand for gold, contributed to a decline in prices for the precious metal, said Chintan Karnani, chief market analyst at Insignia Consultants.
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U.S. economic data Monday were upbeat. The Chicago Fed's index of national economic activity was a positive 0.10 last month, down from the upwardly revised positive 0.98 in February. The flash IHS Markit U.S. manufacturing PMI climbed to 56.5 this month from 55.5 and touched a 3 1/2 -year high. Existing-home sales, meanwhile, climbed to a 5.60 million seasonally adjusted annual pace in March.
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In Monday trading, the SPDR Gold Shares GLD, -0.80% exchange-traded fund fell 0.9% and the iShares Silver Trust SLV, -2.85% fell 2.8%, after notching a weekly rise of 3.1%. The VanEck Vectors Gold Miners GDX, -1.32% shed 0.9%.
Elsewhere in the metals market, May copper HGK8, -0.18% slipped by 2.45 cents, or 0.8% to close at $3.1105 a pound, while July platinum PLN8, -0.05% shed $9.40, or 1%, to settle at $922.40 an ounce.
June palladium PAM8, -0.27% tumbled $50.65, or 4.9%, to close at $979.55 an ounce. The drop on the day marked its largest one-day fall since March 1, U.S. tensions with Russia, which threaten global supplies of the metal, have recently fueled strong weekly gains for the metal, which trades more than 3% higher month to date.
-Mark DeCambre contributed to this article