In spite of U.S. Treasury yields rocketing to nearly 16-year highs on Tuesday, gold prices continued to rise above recent lows as investors awaited this week’s conference of central bankers for signs regarding interest rates.
By 0253 GMT, spot gold was holding steady at $1,894.89 per ounce, holding above last week’s five-month low of $1,883.70. At $1,923.50, U.S. gold futures were unchanged.
Gold experienced its best day in more than two weeks on Monday, settling 0.3% higher after a week of consecutive falls.
According to Clifford Bennett, chief economist at ACY Securities, “potential buyers have been waiting to see how far gold could fall, and this could be the beginnings of their re-entering the market in force.”
According to him, the moment the U.S. dollar drops from its most recent highs, the gold market would immediately rally.
As a result of the resilient U.S. economy and expectations that the Federal Reserve will maintain higher interest rates for longer, the yield on 10-year Treasury notes reached highs last seen in November 2007. [US/]
Higher rates reduce the appeal of non-yielding bullion by raising bond yields and strengthening the dollar.
At a gathering of central bankers in Jackson Hole, Wyoming, on Friday, the prognosis on interest rates will be based on remarks made by Fed Chair Jerome Powell.
“The chair is likely to highlight that the Fed has done a good job in bringing headline inflation down towards the target range… and this could be enough to take some of the pressure off interest rates on the gold market,” Bennett said.
Exchange-traded funds (ETF) backed by traditional safe-haven gold have steadily lost appeal this year as concerns about a U.S. slowdown have diminished and bond yields have increased.
The largest gold-backed ETF in the world, SPDR Gold Trust, started to lose money again on Monday. [GOL/ETF]
Spot silver dropped 0.3% to $23.27 per ounce and platinum held constant at $909.41 in other metals. To $1,243.91, palladium was down 0.1%.