Gold slumps below $1,900 to six-month low as dollar, Treasury yields surge (NYSEARCA:GLD)

Gold futures extended declines for a third straight session Wednesday, as the prospects of higher-for-longer interest rates sent investors to the safety of the dollar, making gold more expensive for overseas buyers.

The ICE U.S. Dollar Index rose 0.4% to trade near 106.70, after hitting its highest intraday level since November 30.

Front-month Comex gold (XAUUSD:CUR) for September delivery ended -1.5% to $1,871.60/oz, its lowest settlement value since March 10, while front-month September silver (XAGUDS:CUR) closed -2% to $22.477/oz.

ETFs: (NYSEARCA:GLD), (NYSEARCA:GDX), (GDXJ), (IAU), (NUGT), (PHYS), (GLDM), (AAAU), (SGOL), (BAR), (OUNZ), (SLV), (PSLV), (SIVR), (SIL), (SILJ), (SLVP)

Newmont (NEM) was one of the day’s biggest decliners on the S&P 500, -5.4%; other large losers included AngloGold Ashanti (AU) -8.6%, Harmony Gold (HMY) -5.6%, Gold Fields (GFI) -5.4%, Agnico Eagle Mines (AEM) -3.9%, Barrick Gold (GOLD) -3.7%.

“As long as the narrative remains Gold suffers biggest drop since August 1 as Fed flags higher-for-longer outlook, it’s going to continue pressuring precious metals,” TD Securities analyst Ryan McKay said, adding that gold’s break below $1,900/oz also triggered technical selling.

Rates on 2-, 10- and 30-year Treasurys have all jumped by more than a full percentage point each from their 2023 lows, they closed Wednesday at 5.142%, 4.625% and 4.731%, respectively.

On the flip side, gold continued to find some support from strong physical demand, especially from central banks and in China, although “the near-term dynamics are certainly the Fed,” McKay said.