El Salvador lawmakers overturn mining ban Bukele called absurd
El Salvador became the first country in the world to ban all forms of metals mining in 2017.
Gold failed to snap out its recent slump and is heading for a fifth straight decline on Monday, as benchmark US Treasury yields advanced once again following the whipsawing of rates seen late last week.
Spot gold fell 0.5% to $1,724.86 an ounce by 1:40 p.m. EST, despite seeing gains earlier in the session. US gold futures were also down 0.4% to $1,721.60 an ounce.
Meanwhile, the rate on 10-year treasuries jumped three basis points, further diminishing the appeal of the non-interest-bearing metal. The 30-year bond’s yield rose as much as 8 basis points.
Bullion fell more than 6% in February, the biggest monthly drop in four years, as expectations for recovering economies boosted bond yields. Hedge funds and other large speculators have cut their bullish wagers on gold futures and options to the lowest since May 2019. Holdings in exchange-traded funds backed by the metal have also slid.
“Gold is continuing to follow the US bond yield trends very closely,” Commerzbank AG analyst Carsten Fritsch said in a note to Bloomberg.
However, some analysts still believe bullion’s allure as a hedge against inflation could eventually help shore up demand.
“Gold has responded more to the combination of rising confidence and rising yields than to any fear of untoward inflationary pressures,” StoneX analyst Rhona O’Connell said.
Bullion still has medium-term tailwinds from “the massive amount of liquidity in the financial system, with trillions of dollars of capital looking for a home,” O’Connell added.
(With files from Bloomberg)
