Subdued greenback and slight retreat in US treasury yields props up metal as investors prepare for week of speeches from Fed policymakers
27 September 2021 - 08:09
byEileen Soreng
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Bengaluru — Gold prices firmed on Monday, propped up by a subdued dollar and slight retreat in the US treasury yields, with investors gearing up for a week of speeches from US Federal Reserve policymakers for cues on the central bank’s rate hike path.
Spot gold was up 0.5% at $1,759.06/oz, at 4am GMT, while US gold futures were up 0.4% at $1,759.00.
While the dollar index softened, the benchmark 10-year treasury yields eased after hitting their highest since early-July. A weaker dollar offered support to gold prices, making bullion cheaper for holders of other currencies.
“Gold is still looking slightly precarious where it is right now, and it's probably bouncing off key technical level around $1,750,” IG Market analyst Kyle Rodda said.
“Gold remains an yield story and that yield story is very much tied back to the tapering story.”
A slew of Fed officials are due to speak this week, including chair Jerome Powell, who will testify this week before Congress on the central bank’s policy response to the pandemic.
“There’ll be a lot of questions being put to Fed speakers about what the dot plots implied last week and weather there is higher risk of heightened inflation going forward and that rate hikes could be coming in the first half of 2022,” Rodda said.
A pair of Federal Reserve policymakers said on Friday they felt the US economy is already in good enough shape for the central bank to begin to withdraw support for the economy.
Gold is often considered a hedge against higher inflation, but a Fed rate hike would increase the opportunity cost of holding gold, which pays no interest.
Investors also kept a close watch on developments in debt-laden property giant China Evergrande saga as the firm missed a payment on offshore bonds last week, with further payment due this week.
Holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, increased 0.1% to 993.52 tonnes on Friday from 992.65 tonnes in the previous session.
Silver rose 0.9% to $22.61/oz. Platinum climbed 1.3% to $994.91, while palladium gained 0.7% to $1,985.32.
Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
Gold rises on soft dollar
Subdued greenback and slight retreat in US treasury yields props up metal as investors prepare for week of speeches from Fed policymakers
Bengaluru — Gold prices firmed on Monday, propped up by a subdued dollar and slight retreat in the US treasury yields, with investors gearing up for a week of speeches from US Federal Reserve policymakers for cues on the central bank’s rate hike path.
Spot gold was up 0.5% at $1,759.06/oz, at 4am GMT, while US gold futures were up 0.4% at $1,759.00.
While the dollar index softened, the benchmark 10-year treasury yields eased after hitting their highest since early-July. A weaker dollar offered support to gold prices, making bullion cheaper for holders of other currencies.
“Gold is still looking slightly precarious where it is right now, and it's probably bouncing off key technical level around $1,750,” IG Market analyst Kyle Rodda said.
“Gold remains an yield story and that yield story is very much tied back to the tapering story.”
A slew of Fed officials are due to speak this week, including chair Jerome Powell, who will testify this week before Congress on the central bank’s policy response to the pandemic.
“There’ll be a lot of questions being put to Fed speakers about what the dot plots implied last week and weather there is higher risk of heightened inflation going forward and that rate hikes could be coming in the first half of 2022,” Rodda said.
A pair of Federal Reserve policymakers said on Friday they felt the US economy is already in good enough shape for the central bank to begin to withdraw support for the economy.
Gold is often considered a hedge against higher inflation, but a Fed rate hike would increase the opportunity cost of holding gold, which pays no interest.
Investors also kept a close watch on developments in debt-laden property giant China Evergrande saga as the firm missed a payment on offshore bonds last week, with further payment due this week.
Holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, increased 0.1% to 993.52 tonnes on Friday from 992.65 tonnes in the previous session.
Silver rose 0.9% to $22.61/oz. Platinum climbed 1.3% to $994.91, while palladium gained 0.7% to $1,985.32.
Reuters
Asian shares inch higher as risk-on sentiment returns
Supply worries support oil
Palm oil futures expected to stay strong until March
Taper promise pushes global markets higher
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