Gold prices experienced a minor decline on Monday after reaching a five-month peak in the preceding session, as the U.S. benchmark 10-year Treasury yield surpassed the 5% mark. Concurrently, investors closely monitored the escalating unrest in the Middle East.
At 1126 GMT, spot gold saw a 0.2% decrease, settling at $1,978.07 per ounce, while U.S. gold futures retreated by 0.2% to $1,989.80.
Ole Hansen, Head of Commodity Strategy at Saxo Bank, noted, “The market is basically in need of consolidation after a strong rally in the past two weeks. It’s equally important to see what’s happening in the U.S. bond market because we’re seeing a significant jump in U.S. yields.”
The yield on the benchmark 10-year U.S. Treasury note breached the 5.0% threshold, marking levels last seen in July 2007. This rise diminished the appeal of non-yielding bullion.
Gold prices had reached their highest point since mid-May on Friday, surging approximately 9% over the past two weeks. Investors sought the safety of gold amid concerns that the Israel-Hamas conflict might escalate into a broader Middle East crisis.
Hansen added, “If we start to see ETF investors getting back, having been significant sellers since June, that could be the next leg-up in gold.”
On Friday, holdings of the SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund (ETF), increased by 1.77% to reach 863.24 tonnes. Additionally, COMEX gold speculators shifted to a net long position during the week ending October 17.
Amid escalating tensions in the Middle East, the U.S. issued warnings of significant risks to U.S. interests. Israel conducted air strikes on Gaza, while clashes on its border with Lebanon intensified.
In the days ahead, investors will keep a close eye on the U.S. PCE (Personal Consumption Expenditures) price index, regarded as the Federal Reserve’s preferred measure of inflation. Additionally, U.S. GDP figures for the third quarter, the European Central Bank’s rate decision, and global flash PMIs will be monitored for economic cues.
In other precious metal news, spot silver declined by 0.5%, reaching $23.22 per ounce, platinum fell by 0.2%, settling at $892.60, and palladium saw a 0.2% gain, closing at $1,100.01.
