Gold prices jump to start May trade amid subdued dollar, bond yields

Gold futures climbed sharply Monday morning as weakness in the dollar and subdued yields for government bonds helped to revive some buying in bullion after last week’s drop.

Gold for June delivery
GCM21,
+0.97%

GC00,
+0.97%

 rose $17.60, or 1%, to trade at $1,785.50 an ounce. Meanwhile, July silver
SIN21,
+2.33%

was up 72 cents, or 2.8%, at around $26.57 an ounce.

Some market participants attributed the gains for silver and gold on the session to a hunt for bargains after last week’s skid.

“The gold and silver bulls have regained the slight near-term technical advantage,” wrote Jim Wyckoff, senior analyst at Kitco.com.

“Gold and silver prices are solidly up in early U.S. trading Monday, on some perceived bargain hunting and amid bullish outside market forces that include a weaker U.S. dollar index ..,” wrote the Kitco analyst in a daily research note.

The yield on the 10-year Treasury note
TMUBMUSD10Y,
1.629%

was edging lower at around 1.63%. Bond prices rise as yields fall. Meanwhile, the dollar was off 0.2%, as gauged by the ICE U.S. Dollar Index
DXY,
-0.14%
.

A weaker buck can make precious metals that are priced in the currency more appealing to overseas buyers, while subdued yields can help to diminish the opportunity cost of owning yield-bearing, haven debt compared against metals that don’t offer a coupon.

Last week, gold fell 0.6% for the week, but saw a monthly rise of about 3%—the first monthly climb of the year so far—while silver ended down around 0.8% for the week, settling up 5.5% for the month, according to FactSet data.

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