Gold Trust Tumbles Amid Strengthening Dollar and Rising Treasury Yields
On Wednesday afternoon, shares of the SPDR Gold Trust (NYSE:GLD) were trading lower due to a strengthening U.S. dollar and rising Treasury yields. According to Richmond Federal Reserve Bank President Tom Barkin, persistent inflationary pressures justify sustained policy tightening.
Barkin's comments on Tuesday pushed Treasury yields higher and boosted the value of the U.S. dollar, making gold less attractive as an investment option. Unlike bonds or cash equivalents, physical gold generates no interest or dividends for its holders, making it a less appealing choice as interest rates rise.
The stronger dollar also increases the purchase cost of dollar-denominated bullion for overseas buyers, reducing international demand and driving temporary capital outflows from physical gold trusts.