Gold Pops as Weak Treasury Yields Offset Dollar Strength
Gold traded higher early on Friday following nine losing sessions even as the United States (US) dollar rose as treasury yields weakened. Gold for December delivery last saw up US$3.10 to US$1,918.30 per ounce.
The price of the metal has dropped by US$100 over the past month as the dollar and bond yields rise amid higher interest rates as the minutes of the Federal Reserve’s latest policy meeting showed policymakers inclined to be hawkish to check inflation.
“The fourth weekly decline in a row has been driven by rising yields and a stronger dollar amid speculation the FOMC may have to hike rates further as incoming economic data points to continued price pressure.
“As long this remains the focus asset managers and other large investors will have their focus elsewhere amid the current high opportunity/funding cost for holding gold relative to short-term money market product,” Saxo Bank noted.
The dollar rose early, with the ICE dollar index last seen up 0.03 points to 103.6, the highest since June 12. Treasury yields were lower, with the US two-year note last seen paying 4.94%, down 0.9 basis points, while the 10-year note was down 1.1 basis points to 4.275%.
Gold Pops as Weak Treasury Yields Offset Dollar Strength