Gold prices experienced a slight upward trend on Tuesday as benchmark U.S. Treasury yields receded, following a recent breach of the 5% threshold. Investors are eagerly awaiting key economic data releases later in the week to gain insights into the potential shifts in U.S. monetary policy.
At 0059 GMT, spot gold showed a modest 0.1% increase, reaching $1,973.69 per ounce, while U.S. gold futures registered a marginal 0.1% decrease, settling at $1,985.10.
The yield on the benchmark 10-year U.S. Treasury note witnessed a decline after briefly surpassing the 5.0% mark on Monday, marking a level last seen in July 2007. This surge in yields raised concerns about the potential economic repercussions stemming from elevated borrowing costs.
Market participants are currently focused on forthcoming economic data releases, including U.S. Gross Domestic Product (GDP) figures for the third quarter, which is scheduled for Thursday, and the U.S. Personal Consumption Expenditures (PCE) price index, set to be released on Friday. These indicators will offer valuable insights into the economic health of the United States and its potential implications for the monetary policy direction of the Federal Reserve.
Notably, higher interest rates elevate the opportunity cost of holding gold, as the precious metal does not provide interest or yield.
In addition to economic considerations, investors remain attentive to developments in the Middle East, where Israel conducted airstrikes on numerous targets in Gaza on Monday while its soldiers engaged in clashes with Hamas militants during raids into the besieged Palestinian territory.
The SPDR Gold Trust, recognized as the world’s largest gold-backed exchange-traded fund, reported a 0.4% decline in its holdings on Monday.
As gold prices respond to a complex web of factors, including interest rates, geopolitical developments, and economic data, market participants continue to scrutinize these variables for signals regarding the precious metal’s future performance.
