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Metals Stocks: Gold melts Monday, logs steepest daily drop in 3 1/2 months as yields and dollar pop following Biden’s Fed picks

Gold futures skidded lower Monday, registering the steepest daily decline in more than three months, as a rally in Treasury yields and a strengthening of the U.S. dollar buffeted precious metals to kick off a holiday-shortened Thanksgiving week. U.S. markets will be closed on Thursday in observance of Thanksgiving and will end early the Friday after the holiday.

The slump for gold followed the White House’s announcement that President Joe Biden has nominated Jerome Powell to a second four-year term as Fed chairman, and named Fed Gov. Lael Brainard to serve as the central bank’s vice chairwoman.

The dollar measured by the U.S. ICE Dollar Index
DXY,
+0.49%
,
rose around 0.5%, hanging near the loftiest level since the summer of 2020, after the nominations. Meanwhile, yields for government debt pushed higher and prices extended a drop, drawing away some demand from the nonyielding commodity that often competes against it for safe-haven bids. The 10-year Treasury note BX:TMUBMUSD10Y rate was at around 1.62%, compared with 1.535% on Friday at 3 p.m. Eastern Time.

Shaking off COVID-related unrest in Europe, December gold
GCZ21,
-2.46%

GC00,
-2.46%

traded down $45.30, or 2.4%, to settle at $1,806.30 an ounce, marking the sharpest percentage drop since Aug. 6, while pushing the precious metal to the lowest level since Nov. 4, FactSet data show. Gold booked a third straight decline, matching the longest such skid since the period ended Oct. 11.

Strategists noted the bullion collapsed through technical values at around $1,835, viewed as a key support threshold for the metal, which may have helped to accelerate Monday’s selling.

“Gold is getting punished as stocks hit fresh record highs and the dollar soars after President Biden selected Jerome Powell for a second term as Fed Chair,” wrote Edward Moya, senior market analyst at Oanda Corp., in a daily note.

Analysts said that the pick of Powell helped to maintain the idea of monetary-policy continuity for markets and suggested that the central bank will continue a path of tapering that is likely to eventually lead to higher interest rates, a headwind for gold in the longer term.

“This continuity is important in that it keeps the prospect of an accelerated Fed taper very much on the table, thus pushing short term rates higher as well as a stronger US dollar,” wrote Michael Hewson, chief market analyst at CMC Markets.

A strengthening dollar can hurt demand for assets priced in the currency, making them more expensive for buyers using weaker monetary units.

The moves for gold also come after a weekend of protests in Europe that turned violent at times over increasing COVID-19 restrictions across the continent.

In other metals, December silver
SI00,
-2.30%

shed 48.4 cents, or 2%, to settle at $24.297 an ounce and December copper
HGZ21,
-0.37%

lost 1.1 cent, or 0.2%, to finish at $4.3965 a pound.

Meanwhile, January platinum
PLF22,
-1.81%

 declined $20.90, or around 2%, to settle at $1,015.10 an ounce, while palladium
PAZ21,
-5.65%

tumbled $122.60, or 5.9%, to settle at $1,950.60 an ounce, marking the steepest daily percentage decline since Sept. 20, according to FactSet data.

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