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Gold ekes out gains on lower U.S. treasury yields

August 16, 2022: Gold prices edged higher on Tuesday, supported by a dip in U.S. bond yields, although a stronger dollar and concerns over further rate hikes by the Federal Reserve kept gains in check.

Spot gold was up 0.1% at $1,781.40 per ounce, as of 0241 GMT. U.S. gold futures eased 0.1% to $1,796.70.

Benchmark U.S. 10-year Treasury yields fell for a third session to 2.7788%, decreasing the opportunity cost of holding non-interest-bearing gold. 

Gold prices dropped more than 1% to a one-week low on Monday, as the dollar climbed to a one-week peak on a safe-haven bid after weak global economic data reignited recession fears. 

"A slew of weak data from China has revived fears of a global slowdown, which sent the U.S. dollar higher to the detriment of metals," said Matt Simpson, a senior market analyst at City Index.

"Gold failed to attract safe-haven flows, and its break of $1,783 support likely triggered stops along the way. Also, Friday's mild attempt to close above $1,800 was a clue that all was not well for gold at those highs."

Data on Monday showed U.S. single-family homebuilders' confidence and New York state factory activity fell in August to their lowest levels since near the start of the COVID-19 pandemic.

Industrial output in China expanded at 3.8% in July from year-ago levels, slowing from a 3.9% rise in the prior month.

Adding to slowdown worries, Fed officials have maintained a hawkish tone and hinted at more rate hikes down the year to tame high inflation.

Rising U.S. interest rates and a slowing economy could potentially lead to a reduction in demand for bullion.

Investors now await minutes from the Fed's July meeting due on Wednesday for clues on further rate hikes.

Elsewhere, spot silver slipped 0.3% to $20.20 per ounce, platinum fell 0.1% to $932.01, and palladium was up 0.1% at $2,148.76.

Reuters

Posted on:2022-08-16T09:48:06+05:00

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