Precious-Gold finds strength from falling bond yields and the US dollar

By admin

As the dollar and Treasury yields dropped from recent highs ahead of critical U.S. inflation and jobs data this week that might determine the outlook for interest rates, gold prices increased on Tuesday.

Fundamentals
Spot gold reached its highest level since August 10 on Monday and was up 0.1% by 0113 GMT to trade at $1,921.69 per ounce. At $1,949.30, U.S. gold futures were up 0.1%.

In contrast, benchmark U.S. 10-year Treasury rates fell farther away from the 2007 highs reached last week, which caused the U.S. dollar to decline versus a basket of major currencies.

For holders of foreign currencies, a declining dollar tends to make gold, which pays no interest, less expensive.

Focus will be on the Federal Reserve’s preferred inflation indicator, the U.S. PCE price index due on Thursday, and the non-farm payrolls report due on Friday, among a slew of economic data slated to be issued this week.

Record-high levels of public debt, geopolitical conflicts that put the world’s trade system in jeopardy, and the likelihood that productivity improvements will remain sluggish will likely result in slow global growth that will stifle some nations’ development even before it begins.

Robert Holzmann, a policymaker at the European Central Bank, told Bloomberg News in an interview on Monday that if there are no significant shocks in inflation statistics before its next meeting in September, there is a case for raising interest rates even more.

According to government statistics, Japan’s unemployment rate increased from the prior month to 2.7% in July.

The largest gold-backed exchange-traded fund in the world, SPDR Gold Trust, said that its holdings increased on Monday by 0.3% to 886.64 metric tonnes.

Spot silver dropped 0.2% to $24.22 an ounce in other trading, and platinum held steady at $964.90 after opening at its highest level in a month. To $1,247.36, palladium fell 0.6%.