US treasury yield jumps to 3-month high; gold weighs down; global stocks rise

Market


The US treasury yield rose to three-month high at 1.47% as as investors awaited speeches from Federal Reserve policymakers for clues on when the central bank could taper its pandemic-era economic support.

The rise in US yields, especially on an inflation-adjusted basis, is also lifting the dollar which rose 0.15% against a basket of currencies inching towards the one-month high hit last week.

Pressured by bond yields uptick and a robust dollar gold prices were subdued on Monday. Spot gold was little changed at $1,750.51 per ounce by 09:12 GMT. US gold futures were down 0.1% to $1,750.20. Meanwhile, Silver rose 0.4% to $22.50 per ounce.

“Gold seems to be in an extended period of doldrums and is unable to shake itself either way, with firmer 10-year Treasury yields and a robust dollar acting as headwinds,” independent analyst Ross Norman said.

Market focus will now be on speeches by a slew of Fed officials this week including Chairman Jerome Powell, who will testify before Congress on the central bank’s policy response to the pandemic.

Gold is often considered a hedge against higher inflation, but a Fed rate hike would increase the opportunity cost of holding gold, which pays no interest.

Investors were also keeping an eye on developments surrounding debt-laden China Evergrande, after the property giant missed a bond payment deadline last week.

In the equity segment, world shares rose, led by sharp gains in energy shares as crude oil prices soared to three-year highs of almost $80 a barrel while European stocks firmed after Germany’s election results ruled out chances of a purely left-wing coalition.

German shares jumped 1.1%, while a pan-European equity index was up half a percent.

(With inputs from agencies)

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