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Metals Stocks: Gold prices fall with Treasury yields up as pace of U.S. inflation hits 13-year high


Gold prices declined on Thursday, pressured as Treasury yields edged higher in the wake of government data showing that the pace of U.S. inflation climbed to a 13-year high in May.

The U.S. consumer price index jumped 0.6% last month, marking the fourth large gain in a row. The rate of inflation over the past year escalated to 5% from 4.2% in the prior month. That put it at the highest level since 2008.

The Federal Reserve is “still of the opinion that current inflation is temporary, due to COVID-caused supply issues, and a rebound of the economy after lockdowns last year,” Jason Teed,  co-portfolio manager of the Gold Bullion Strategy Fund
told MarketWatch after the CPI data. “So far, the market appears to agree.”

“Should inflation continue beyond what’s expected, gold may continue to increase in price, but if we see inflation begin to ameliorate, the metal may let go of some of the gains we’ve seen so far this year,” he said.   

August gold

 was down 80 cents or 0.04%, at $1,894.70 an ounce, following a nearly 0.1% rise on Wednesday.

Gold prices traded mostly lower after the inflation data, but have managed to pare their losses from the day’s low at $1,871.80.

The CPI report “falls into the camp of those who think inflation could get too hot in the coming months,” said Jim Wyckoff, senior analyst at, in a market update.

“On a near-term basis, the gold and silver traders are placing more emphasis on the uptick in bond yields after the CPI report, and less on the bullish implications of rising inflation down the road,” he said.

The slide for bullion comes as the bond yields move higher and the dollar steadied. The benchmark 10-year Treasury yield

on Wednesday hit its lowest level since early March but traded up around 1.50% in Thursday dealings, while the dollar held ground above 90, as gauged by the ICE U.S. Dollar Index

Gold markets have struggled to gain sustained altitude above a psychologically important price at $1,900 an ounce. A slide in bond yields and a weak dollar has intermittently served as support for the yellow metal, but uncertainty about the path of inflation has made for turbulent trade.

Meanwhile, the European Central Bank left its benchmark rates unchanged, as expected, but said that it could recalibrate its asset-purchase program to help continue to support financial markets in the eurozone.

Among other metals traded on Comex, July copper

lost 1.1% to $4.48 a pound.

July platinum

shed 0.7% to $1,143.60 an ounce and September palladium

traded at $2,769 an ounce, down 0.1%.

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