Rising bond yields take their toll on gold. The yellow metal is less attractive as a non-interest-bearing alternative investment in this environment, strategists at Commerzbank report.

Ongoing buying interest by ETF investors prevent a more pronounced slide

“Higher bond yields and real interest rates in the US presumably began taking their toll yesterday. Several Fed representatives had likewise spoken out in favour of monetary policy being tightened more quickly or to a greater extent following the speech given by Fed Chair Powell. Yields on ten-year US Treasuries have now climbed further to 2.4%. Rising yields and real interest rates make gold less attractive as a non-interest-bearing alternative investment.”

“In view of the latest steep rise in yields, gold is still holding its own pretty well in our opinion. A more pronounced price slide is probably being prevented by the ongoing buying interest shown by ETF investors: according to Bloomberg, yesterday saw further inflows of nearly ten tons into the gold ETFs it tracks.”