Gold climbs as US dollar, treasury yields fall

Bengaluru — Gold prices edged higher on Wednesday, helped by a frail US dollar and fall in treasury yields, while investors awaited guidance on the US Federal Reserve’s policy stance to gauge whether a slowdown is likely.

Spot gold rose 0.3% to $1,656.60 per ounce by 4.18am GMT, while US gold futures were up 0.2% at $1,660.90.

Yields on the 10-year treasury note fell, moving further away from a near 15-year high hit last week, as data signalled that the Fed’s aggressive tightening was cooling the economy.

The dollar index lingered close to a three-week low touched on Tuesday.

Gold could see further near-term upside moves if the US dollar continues to weaken and bond yields fall, said IG market strategist Yeap Jun Rong.

“With the bearish positioning for gold prices, the possibility of a strong near-term rally could be on the table if any indications of a rate slowdown is presented from the Fed.”

While the Fed is widely expected to deliver a fourth straight 75-basis-point (bps) interest-rate hike in November, it is also likely to debate how much higher it can safely push borrowing costs.

Rising interest rates dim bullion’s appeal, as they increase the opportunity cost of holding the non-yielding asset.

Data on Tuesday showed US consumer confidence ebbed in October, home prices fell sharply in August and there were signs that the Fed’s aggressive stance is starting to cool the labour market.

Investors will keep a close watch for US GDP and core inflation measures, and Thursday’s policy meet of the European Central Bank (ECB).

Spot gold is biased to retest a support at $1,644 per ounce, a break below which could open the way into the $1,625-$1,633 range, according to Reuters technical analyst Wang Tao.

Spot silver rose 0.6% to $19.46 per ounce, platinum gained 0.6% to $920.90 and palladium climbed 1.9% to $1,960.49.

Reuters