Metals: Gold Falls as Dollar Rebounds, Treasury Yields Rise

By FeaturesDow Jones Newswires

Gold prices, weighed down by a rebounding dollar and concerns about higher interest rates, fell for the second straight session on Monday.

Front-month gold for January delivery declined 0.9% to $1,339.80 a troy ounce on the Comex division of the New York Mercantile Exchange. The dollar plumbing fresh multiyear lows sent gold prices to their highest level since August 2016 last week, as a weaker U.S. currency makes gold and other dollar-denominated commodities cheaper for overseas buyers.

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However, on Monday, the WSJ Dollar Index, which tracks the dollar against a basket of 16 other currencies, rose 0.3% coming off its lowest close since January 2015.

The combination of a stronger dollar and higher Treasury yields was hurting gold because it showed more investors were anticipating the Federal Reserve will stick to its projections for three interest-rate increases this year, according to some analysts. Strong economic data has helped send the yield on the benchmark 10-year U.S. Treasury note to its highest level since April 2014.

"This will keep the Wall Street traders out of the gold market for the time being," said Walter Pehowich, senior vice president at Dillon Gage Metals, in a note to clients.

Still, some investors have said higher interest rates might not send gold much lower if money managers use the metal to hedge against an unexpected pickup in inflation. Investors will be closely watching central-bank signals after the Fed's two-day monetary policy meeting later this week, as well as data on manufacturing and unemployment.

Among base metals, front-month copper for January delivery swung between small gains and losses and closed down 0.1% at $3.1780 a pound. Prices have fallen 3.3% from the nearly four-year highs seen late last month, though some investors expect favorable global demand for the industrial metal and possible supply constraints to support prices moving forward.

Write to Amrith Ramkumar at amrith.ramkumar@wsj.com and David Hodari at David.Hodari@dowjones.com

(END) Dow Jones Newswires

January 29, 2018 15:44 ET (20:44 GMT)

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