Gold resumes weakening as both rates and the dollar strengthen


A gauge of global equity markets declined on Monday as USA bond yields moved closer to the 3 percent level that has unsettled investors in recent months, while a fall in commodity prices pressured materials stocks.

United States treasury yields rose to 3% for the first time in more than four years, reflecting the durability of the U.S. economic expansion after USA consumer confidence rebounded in April and new home sales increased more than expected in March. The 10-year yield has not surpassed 3 percent since January 2014. "A clean break, unaccompanied by a pick-up in volatility and sell-off in risk assets, would force dollar shorts to capitulate and at the very least, severely test EUR/USD 1.2150". Investors are worrying about the growing supply of government debt and accelerating inflation as oil and commodity prices have been rising in recent weeks.

Rusal owns a 28 percent stake in Norilsk Nickel, the world's biggest palladium producer. Shares of aluminum company Alcoa (AA.N) tumbled 13.51 percent.

After falling for three sessions, spot gold edged up 0.1 percent to $1,325.16 per ounce at 0041 GMT, not far from a low of $1,321.81 an ounce touched on Monday, its weakest level since April 6. The Nasdaq composite gave up 0.2 percent to 7,128.60. MSCI's gauge of stocks across the globe.MIWD00000PUS shed 0.29 percent.

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While the psychologically important level has stoked speculation about which markets may be disrupted in the fallout, the US currency looks to be one of the biggest winners.

The dollar index.DXY rose 0.67 percent, with the euro EUR= down 0.65 percent to $1.2206.

Gold has slid almost 2 percent in the last three trading sessions as a rally in USA yields towards the 3 percent mark pushed the dollar index to its highest since mid-January, making the metal more attractive to price-sensitive buyers. The Japanese yen weakened 0.97 percent versus the greenback at 108.70 per dollar.

The Dow .dji rose 0.25 percent overnight, ending a five-day losing streak, and the S&P 500 .spx gained 0.18 percent on optimism over a spate of upbeat earnings that managed to offset jitters over rising USA bond yields. Investors juggled downward pressure after Iran squashed hopes that OPEC would extend its production cap pact with support on fears USA sanctions could dampen Iran's output.