Gold rises on weaker US dollar and bond yields

Bengaluru — Gold prices rose on Tuesday, as the US dollar and treasury yields fell after traders slightly pared bets for an interest rate cut by the US Federal Reserve in the first quarter of 2024.

Spot gold was up 0.2% at $2,033.49 an ounce by 4.51am GMT. Bullion had surged to a high of $2,135.40 on Monday, before dropping over $100 in a single day to close 2% lower.

US gold futures for February delivery rose 0.5% to $2,051.70.

Making gold less expensive for other currency holders, the dollar index fell 0.1%, while yields on 10-year treasury notes slipped to 4.2587%.

Even after the dramatic moves in gold prices over the past 24 hours, “for now, the overall trend for gold still looks bullish”, said Ilya Spivak, head of global macro at Tastylive.

A wave of profit-taking seems to have been triggered after gold rallied at the weekly open to catch up to US Federal Reserve chair Jerome Powell’s dovish comments on Friday, along with “pre-positioning ahead of this week’s event risk (Reserve Bank of Australia and Bank of Canada rate decisions, US jobs data)”, Spivak said.

However, traders on Monday lowered their Fed rate cut bets by March next year to about 60%, from 70%, CME’s FedWatch Tool shows.

Investors are awaiting the closely-watched US non-farm payrolls data on Friday, which could help further gauge the interest rate outlook. Lower interest rates reduce the opportunity cost of holding non-interest-bearing bullion. Data out last week pointed to cooling inflationary pressures and a gradually easing labour market, reinforcing the notion of an early rate cut.

Spot gold may test support of $2,009 an ounce, a break below which could open the way towards $1,980, according to Reuters technical analyst Wang Tao.

Spot silver rose 0.2% to $24.53 an ounce, palladium rose 0.1% to $977.62 an ounce, while platinum slipped 0.3% to $913.67.

Reuters