Gold slips as US bond yields rise before Powell’s speech
If yields keep increasing, the bullion could break below the key support level of about $1,974, analyst says
06 November 2023 - 08:00
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.
Bengaluru — Gold prices slipped on Monday due to a slight uptick in US bond yields, before a speech by Federal Reserve chair Jerome Powell later this week for more clarity on the interest rate outlook.
Spot gold was down 0.4% at $1,983.49 per ounce by 4.44am GMT (6.44am) after rising above the key $2,000 level on Friday. US gold futures fell 0.4% to $1,990.60.
“The major factor that will influence gold in the near term will be the US 10-year Treasury yields … if you start to see resurgence in yields, gold could break below the key support level about $1,974,” said Kelvin Wong, senior market analyst for Asia Pacific at Oanda.
Benchmark 10-year Treasury yields rose to 4.5910% after hitting a five-week low on Friday, decreasing appeal for non-yielding bullion.
Data on Friday showed US job growth slowed in October, and the increase in annual wages was the smallest in nearly 2½ years, pointing to easing labour market conditions.
Soft jobs report raised expectations that the Fed may be done with its rate hiking campaign, sending the dollar to a six-week low.
Traders are now pricing in a 95% chance that the US central bank will leave rates unchanged in December and an 86% chance that the first policy easing will come as soon as June.
Investors will be looking out for cues on the Fed’s interest rate path, with at least nine Fed members speaking this week, including Powell’s speech on November 9.
SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, said its holdings rose 0.20% to 863.24 tonnes on Friday.
“ETF holdings have increased by 1-million ounces in the last two weeks, as speculators have covered short positions. Even so, golds performance hinges on an end of Fed’s hiking cycle,” ANZ analysts said in a note dated Friday.
Spot silver eased 0.2% to $23.14 per ounce, platinum fell 0.4% to $926.14 and palladium gained 0.5% to $1,124.46.
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 slips as US bond yields rise before Powell’s speech
If yields keep increasing, the bullion could break below the key support level of about $1,974, analyst says
Bengaluru — Gold prices slipped on Monday due to a slight uptick in US bond yields, before a speech by Federal Reserve chair Jerome Powell later this week for more clarity on the interest rate outlook.
Spot gold was down 0.4% at $1,983.49 per ounce by 4.44am GMT (6.44am) after rising above the key $2,000 level on Friday. US gold futures fell 0.4% to $1,990.60.
“The major factor that will influence gold in the near term will be the US 10-year Treasury yields … if you start to see resurgence in yields, gold could break below the key support level about $1,974,” said Kelvin Wong, senior market analyst for Asia Pacific at Oanda.
Benchmark 10-year Treasury yields rose to 4.5910% after hitting a five-week low on Friday, decreasing appeal for non-yielding bullion.
Data on Friday showed US job growth slowed in October, and the increase in annual wages was the smallest in nearly 2½ years, pointing to easing labour market conditions.
Soft jobs report raised expectations that the Fed may be done with its rate hiking campaign, sending the dollar to a six-week low.
Traders are now pricing in a 95% chance that the US central bank will leave rates unchanged in December and an 86% chance that the first policy easing will come as soon as June.
Investors will be looking out for cues on the Fed’s interest rate path, with at least nine Fed members speaking this week, including Powell’s speech on November 9.
SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, said its holdings rose 0.20% to 863.24 tonnes on Friday.
“ETF holdings have increased by 1-million ounces in the last two weeks, as speculators have covered short positions. Even so, golds performance hinges on an end of Fed’s hiking cycle,” ANZ analysts said in a note dated Friday.
Spot silver eased 0.2% to $23.14 per ounce, platinum fell 0.4% to $926.14 and palladium gained 0.5% to $1,124.46.
Reuters
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
After nearly a month of gains, gold is set to drop
Gold steady ahead of US non-farm jobs report
Gold glistens as dollar dips
Published by Arena Holdings and distributed with the Financial Mail on the last Thursday of every month except December and January.