A retreat in Treasury yields and growing recession fears boost safe-haven demand
05 August 2022 - 07:51
byBrijesh Patel
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 prices steadied at a one-month high on Friday, ahead of a much awaited US jobs data, as a retreat in Treasury yields and growing recession fears boosted safe-haven demand and kept bullion on track for its third straight weekly rise.
Spot gold was flat at $1,790.73/oz at 3.01am GMT, after hitting its highest level since July 5. Prices are up 1.5% this week. US gold futures were steady at $1,807.40/oz.
“Gold continues to benefit from a combination of a weaker dollar that has been driven by falling US bond yields as markets continue to price in peak inflation and a recession,” Oanda senior analyst Jeffrey Halley said.
The yield on 10-year Treasury notes slipped, reducing the opportunity cost of holding non-interest bearing gold. The market’s focus is now on the monthly US non-farm payrolls report due at 12.30pm GMT on Friday that could offer more clarity on the Federal Reserve’s aggressive tightening plans to combat soaring inflation. Economists expect an increase of 250,000 jobs in July.
“A soft payroll number will support gold’s upward momentum as it is likely to result in another bout of dollar weakness as yields fall. Gold should continue grinding towards the $1,900.00 region in the coming sessions,” Halley added.
The Bank of England raised interest rates by the most since 1995 in an attempt to smother surging inflation. The dollar rose 0.2% against its rivals, making gold less appealing for other currency holders.
Sino-US tensions remained in focus after China fired multiple missiles near Taiwan on Thursday, a day after US House of Representatives speaker Nancy Pelosi made a trip to the self-ruled island.
Spot silver rose 0.5% to $20.25/oz, and palladium climbed 0.8% to $2,081.43. Platinum gained 0.8% to $933.91/oz and was heading for its third consecutive weekly rise.
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 steadies at one-month peak
A retreat in Treasury yields and growing recession fears boost safe-haven demand
Gold prices steadied at a one-month high on Friday, ahead of a much awaited US jobs data, as a retreat in Treasury yields and growing recession fears boosted safe-haven demand and kept bullion on track for its third straight weekly rise.
Spot gold was flat at $1,790.73/oz at 3.01am GMT, after hitting its highest level since July 5. Prices are up 1.5% this week. US gold futures were steady at $1,807.40/oz.
“Gold continues to benefit from a combination of a weaker dollar that has been driven by falling US bond yields as markets continue to price in peak inflation and a recession,” Oanda senior analyst Jeffrey Halley said.
The yield on 10-year Treasury notes slipped, reducing the opportunity cost of holding non-interest bearing gold. The market’s focus is now on the monthly US non-farm payrolls report due at 12.30pm GMT on Friday that could offer more clarity on the Federal Reserve’s aggressive tightening plans to combat soaring inflation. Economists expect an increase of 250,000 jobs in July.
“A soft payroll number will support gold’s upward momentum as it is likely to result in another bout of dollar weakness as yields fall. Gold should continue grinding towards the $1,900.00 region in the coming sessions,” Halley added.
The Bank of England raised interest rates by the most since 1995 in an attempt to smother surging inflation. The dollar rose 0.2% against its rivals, making gold less appealing for other currency holders.
Sino-US tensions remained in focus after China fired multiple missiles near Taiwan on Thursday, a day after US House of Representatives speaker Nancy Pelosi made a trip to the self-ruled island.
Spot silver rose 0.5% to $20.25/oz, and palladium climbed 0.8% to $2,081.43. Platinum gained 0.8% to $933.91/oz and was heading for its third consecutive weekly rise.
Reuters
Investors in a bind over offloading Russian gold
Global markets reach highest levels in seven weeks
Gold heads for fourth monthly fall on strong dollar, yields
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.
Most Read
Related Articles
Gold rises as US yields soften and markets eye upcoming jobs report
Artisanal gold mining in SA is out of control. Mistakes that got it here
Gold hits a four-week high
Published by Arena Holdings and distributed with the Financial Mail on the last Thursday of every month except December and January.