On Tuesday, gold and silver prices fell against a rising US Dollar, even though longer-term US interest rates went down in the bond market. Since China stopped for the Lunar New Year holidays, gold and silver prices have dropped as much as 3.8% and 6.9%, respectively, this week.
Today, talks for peace between the US and Iran and between Russia and Ukraine went on in Geneva, Switzerland.
The world’s stock markets fell for the fourth time in five sessions. US tech stocks and stocks in Europe’s aerospace and defence business both fell.
As traders in the US returned from yesterday’s Presidents’ Day holiday, bets on interest rates pushed predictions for the Federal Reserve’s end-2026 rate back above 3% per year on Tuesday. These predictions had dropped to their lowest level since early December.
On the other hand, the bond market saw lower interest rates for longer-term loans. One CNBC host said that the 10-year Treasury yield, which is “the US benchmark,” had dropped.But gold doesn’t seem to care, which goes against the strong negative link that used to exist between gold and the direction of bond yields.
The 10-year Treasury bond yield has dropped more than 1/4 of a percentage point in just two weeks. This is the biggest drop in just two weeks since March of last year.
In the meantime, inflation-protected TIPS yields on 10-year bonds have dropped to levels seen in late October. That’s when gold prices went over $4,000 an ounce for the first time in history.
But on Tuesday in London, the price of gold fell to $4850 an ounce. This was a new record high for the metal this time last month, but it was 13.3% lower than the all-time highs reached at the end of January.”The change took place in 2022,” says James Steel, a rare metals analyst at HSBC, in response to CNBC. Before that, the real rate on the 10-year had a beautiful relationship with gold that went the other way. That didn’t work out, and gold isn’t as affected by real interest rates as it used to be.A lot of people bought small bars and coins in 2022, as well as state banks. This was due to high geopolitical risk.
Tuesday, the Dollar hit its highest level in more than a week on the DXY index. It was trading 2.0% above its 4-year low against the world’s other rich-economy currencies.
Like gold, silver hit 8-session lows against the Dollar. It fell within 10 cents of $72 an ounce, which would have been a new all-time high when it was reached during China’s Christmas bullion trade chaos but is now 40.5% below January’s record high.”Don’t forget that a lot of new money has come into the precious metals market and that prices have gone through the roof,” says Steel of HSBC.Steel says that it really makes gold and silver more volatile. “That’s going to be the word for this year.”
