Gold futures pulled back from a one-month high Thursday as the U.S. dollar bounced and Treasury yields continued to push higher, raising the opportunity cost of holding non-yielding assets like commodities.
“Gold has found a slightly better tone” recently, wrote Chris Weston, head of research at Pepperstone, in a note.
Gold rose Wednesday as the ICE U.S. Dollar Index
a gauge of the currency against a basket of six major rivals, fell 0.5%. The index was up 0.3% on Thursday, but is down 1.1% so far in October. A weaker dollar is seen as a positive for commodities priced in it, making them cheaper to users of other currencies.
However, while the gold market “may love a weaker U.S. dollar…it also is contending with a selloff in US Treasurys and higher yields result in assets with no yield becoming relatively less attractive at the margin,” he said.
The yield on the 10-year Treasury note
was little changed at 0.81%, continuing a rise from above 0.5% in August. Yields rise as Treasury prices fall.