Gold retreats as US Treasury yields climb on uptick in housing starts

NEW YORK/LONDON — Gold dipped on Tuesday as US Treasury yields rose on an uptick in housing starts for November and even though the dollar fell, a factor that generally supports gold.

Market players were wary of taking new positions before the holiday season.

Gold was on track to post its narrowest trading range of any quarter in a decade in the last three months of the year.

Spot gold was down 0.04% at $1,260.86 an ounce by 1:49 p.m. EST ( 1849 GMT), earlier hitting a nearly two-week high of $1,265.20, while US gold futures for February delivery settled down $1.30, or 0.10%, at $1,264.20 per ounce.

US Treasury yields hit session highs and the yield curve steepened as US housing starts unexpectedly rose in November. “That prompted rates to move higher and the US dollar was up as a result,” but edged lower later, said Bart Melek, head of commodity strategy at TD Securities in Toronto.

Higher bond yields make nonyielding bullion less attractive to investors.

They also tend to boost the US dollar, but “investors are adjusting positions ahead of the holiday weekend, so there’s some ambiguity right now,” Mr. Melek said.

Caution about pending US tax legislation pressured the dollar, traders said. Congress appeared all but certain to pass the bill. World stocks dipped with investors taking profits after recent highs in the tech sector before Republican lawmakers achieve their goal of passage.

The dollar eased against the euro, as investors were cautious about how much the tax reforms, if passed, would boost the US economy. “The ( gold) market is trying to move higher… (as) the euro/ dollar is trying to move above $ 1.18 again,” ABN Amro analyst Georgette Boele said, though she added that moves were still relatively small. “Liquidity is drying up a bit.”

Holdings of the world’s largest gold-backed exchange-traded fund, New York-based SPDR Gold Shares, fell 7.10 tons on Monday, their largest one- day outflow since late July, cutting its inflow for the year to 15 tons.

Among other precious metals, silver was down 0.50% at $16.05 an ounce, after seeing a two-week high of $16.22.

Platinum was up 0.80% at $914 an ounce, earlier hitting a twoweek high of $919.40. The metal has rallied nearly $30 an ounce in the last two trading sessions.

Palladium was up 0.60% at $1,023.95 an ounce. —