Gold futures fell 1.5% as a 4.96% 10-year outweighed $100 oil
Gold futures settled at $4,408.9 an ounce on Friday, September 11; the big physical trusts lost 2.0% this week after Thursday's 0.4% PPI print, and Friday's matching CPI rise did not reverse it.
West Texas Intermediate jumped 9.4% this week to $100.05 a barrel after attacks on shipping around the Strait of Hormuz and U.S. strikes on Iranian tankers, the exact bid gold is supposed to catch. Gold futures still settled Friday at $4,408.9 an ounce, down 1.5% from $4,476.6 a week earlier.
Gold futures fell as WTI ran 9.4% to $100
- Gold · 4,408.9
- WTI · 100.05
The 10-year Treasury yield ended Friday at 4.96%. The 10-year real yield, the inflation-indexed rate that is the opportunity cost of holding a metal with no coupon, rose from 2.43% on Friday, September 4, to 2.55% on Thursday. That is the number that cleared the war bid.
$100 oil, 0.4% inflation, and a 4.96% 10-year
Thursday did most of the week's work. The producer-price index for final demand rose 0.4% in August and 5.4% from a year earlier, with goods up 1.1%. WTI added 6.7% that session to $102.48. Gold futures fell 1.2% to $4,407.3; SPDR Gold Shares GLD, the $147.7 billion physical-gold trust, lost 1.7%.
Friday's consumer-price report did not reverse the yield move. The CPI-U rose 0.4% in August after 0.1% in July, and 3.4% over 12 months. Prices excluding food and energy rose 0.3% on the month and 2.4% on the year. Gasoline, up 3.9%, accounted for more than a third of the monthly increase. That is August at the pump. It does not include this week's crude. Gold futures were little changed on Friday at the $4,408.9 settle. GLD bounced 0.6%. Spot gold, at $4,363.01 an ounce on Reuters' 1:40 p.m. Eastern print, was up 1.1% on the session and still down about 1.5% on the week.
The funds that hold bars followed the ounce. SPDR Gold MiniShares GLDM and iShares Gold Trust Micro IAUM each fell 2.0%, matching GLD. IAUM charges 0.09%, GLDM 0.10%, GLD 0.40%. The 0.40% line is still the liquidity pool: GLD averages about $3.35 billion a day in turnover, against $371 million for GLDM and $107 million for IAUM.
The Federal Reserve announces its rate decision at 2 p.m. Eastern on Wednesday, September 16. CME FedWatch put the odds of a 25-basis-point hike near 90% after Friday's consumer-price report, up from more than 70% on Thursday.
Kinross and Agnico led the miner decline
VanEck Gold Miners GDX, a $29.1 billion book of mining stocks, fell 2.2%. Kinross Gold, a 4.2% weight, Agnico Eagle at 10.5%, AngloGold Ashanti, and Gold Fields accounted for 0.88 percentage points of the fund's decline. Newmont, the largest holding at 11%, barely moved.
Kinross led the miner decline this week
- −5.6%
- −4.9%
- −4.3%
- −2.1%
- −1.0%
VanEck Junior Gold Miners GDXJ, smaller gold and silver miners, fell 2.8%. iShares' global gold-miners fund RING fell 2.2%.
The year is still a different story. GDX is up 13.2% year to date against 0.6% for GLD, and 43% over 12 months against 19% for the bars. RING is up 17% year to date. This week did not unwind that gap. It also did not add to it.
Silver and copper sold on the same Thursday
Silver futures fell 2.3% on the week to $65.19 an ounce. iShares Silver Trust SLV lost 2.8%. Thursday was the session that mattered; the trust dropped 5.3%. Year to date SLV is down 9.8%. This week's decline was the same yield shock that hit gold.
Copper futures fell 1.9% to $6.55 a pound after Thursday reports the White House had not finalized a tariff decision on refined copper. iShares MSCI Global Metals & Mining Producers PICK, which holds diversified miners and excludes gold and silver, lost 2.6%. Platinum futures fell 1.6% to $1,797.6.
Crude jumped Thursday as the metals complex sold
- +6.7%
- −1.2%
- −5.0%
- −5.4%
- −6.1%
The complex did not split between haven metal and industrial metal this week. It sold together when wholesale inflation and $100 oil pushed the real yield, then gold bounced a little on Friday while copper and platinum did not.
Gold sits 22% below its 52-week high of $5,626.8. Silver is 46% below $121.79. Over 12 months the physical trusts are still up about 19%, and SLV is up 55%. Tanker strikes and $100 oil arrived this week and did not reflate either metal. The war bid would need the real yield to give back Thursday's move; $100 oil pushed it the other way.
Frequently asked
Why did gold fall when oil surged on war headlines?
The 10-year real yield rose after the producer-price report and $100 oil, and that opportunity cost of holding a metal with no coupon cleared the war bid.
Did Friday's inflation report change anything?
No, the consumer-price rise matched Thursday's print and did not reverse the yield move, though gold and the big bullion trust bounced slightly on the day.
How did gold miners do compared with bullion?
Miner funds fell more than the bars this week, led by Kinross and Agnico, but they remain well ahead of bullion year to date and over 12 months.
Why pay the more expensive bullion trust when cheaper ones exist?
The 0.40% fund is the liquidity pool, trading about $3.35 billion a day against far smaller turnover in the cheaper trusts, which tracked it closely this week.