Global – Despite surging U.S. Treasury yields reaching nearly 16-year highs, gold prices have managed to stabilize above recent lows. As investors await insights from an upcoming central bankers’ meeting regarding interest rates, the non-yielding precious metal remains resilient.
As of 0520 GMT, spot gold maintained its position at $1,895.70 per ounce, hovering above last week’s five-month low of $1,883.70. Meanwhile, U.S. gold futures recorded a 0.1% increase, reaching $1,924.60.
After consecutive weeks of losses, gold rebounded on Monday with a 0.3% increase, marking its strongest performance in over two weeks.
Clifford Bennett, Chief Economist at ACY Securities, noted that potential buyers had been monitoring gold’s price decline, and their resurgence into the market might be underway. He emphasized that if the U.S. dollar experiences a correction from recent highs, it could spark a significant rally in the gold market.
The rising yield on 10-year Treasury notes, touching levels last observed in November 2007, has been influenced by a resilient U.S. economy, prompting speculation that the Federal Reserve will prolong higher interest rates. This scenario could strengthen bond yields and the dollar, potentially reducing the appeal of non-yielding gold.
As market participants look ahead to the central bankers’ gathering in Jackson Hole, Wyoming, the comments of Fed Chair Jerome Powell on interest rates will be closely monitored. Analysts anticipate Powell highlighting the Fed’s success in steering headline inflation towards target levels, potentially alleviating interest rate pressures on the gold market.
Amidst diminishing concerns about a U.S. economic slowdown and the surge in bond yields, the allure of exchange-traded funds (ETFs) backed by traditional safe-haven gold has diminished this year. The world’s largest gold-backed ETF, SPDR Gold Trust, witnessed renewed outflows on Monday.
In the realm of other precious metals, spot silver experienced a 0.3% decline to reach $23.29 per ounce, while platinum registered a marginal 0.1% increase, reaching $909.89. Palladium experienced a slight 0.1% decrease, settling at $1,243.69.
As the market balances influences from rising Treasury yields, central bank cues, and potential dollar corrections, the trajectory of gold prices remains subject to multiple dynamics that will likely shape its performance in the coming days.
