Rising Bond Yields and Chinese Demand Weigh on Gold and Silver
Gold and silver prices took a hit last week as rising bond yields and strong demand from China put pressure on the precious metals market. The gold-to-silver ratio remained near 66, with silver closing at $64.29 per oz and gold slipping to approximately $4,285 per oz.
The sharp increase in 5-year Treasury yields, highlighted by CNBC's Rick Santelli, had a significant impact on the bond market. This move higher could lead to annual debt-service costs exceeding $2 trillion within several years if 5-year Treasury yields remain elevated.
China continues to drive physical gold demand, with imports reportedly on pace to exceed 1,500 metric tons this year. Chinese gold ETF holdings have also expanded significantly during the past three years, reflecting growing interest in gold among Chinese investors.
The eligible gold inventories in COMEX warehouses have fallen sharply, with approximately 4 million ounces leaving in recent weeks. This decline could indicate that physical metal is moving towards strong Asian and other international demand centers.