Gold hovers near 5-month low as yields rise, Jackson Hole in focus

Aug 21 – Gold prices hovered around a five-month low on Monday, as elevated bond yields pressured bullion, while investors looked ahead to the US Federal Reserve’s Jackson Hole symposium later this week for more clarity on the interest rate path.

Spot gold edged up 0.3% to USD 1,893.82 per ounce by 02:13 p.m. ET (1813 GMT), but still held near a five-month low of USD 1,883.70 it touched on Friday.

US gold futures settled 0.3% higher at USD 1,923.00.

“We are seeing some buying interest at these levels, but the buying interest is being limited because the charts remain bearish,” said Jim Wyckoff, senior market analyst at Kitco.

“The recent rhetoric coming from Fed officials has kind of leaned hawkish. Treasury yields have been rising. That’s bearish for the metals … path of least resistance for prices is sideways to lower.”

Helping gold, the dollar index slipped 0.1%. However, benchmark US 10-year Treasury yields extended a rise to 4.3439%, the highest level since October and lessening the appeal of non-yielding bullion.

Gold prices dropped to their lowest since mid-March at USD 1,883.70 last week, as buoyant economic data raised bets for higher-for-longer US interest rates.

Investors’ focus this week will be on Fed Chair Jerome Powell’s speech on Friday, as central bankers from around the world assemble in Jackson Hole for their annual conference.

Gold is highly sensitive to rising US interest rates, as these increase the opportunity cost of holding it.

Meanwhile, receding fears of a US slowdown, surging bond yields, and the robust performance of equities have gradually eroded the appeal of exchange-traded funds (ETF) backed by traditional safe-haven gold.

“With bond yields, which are typically negatively correlated to the gold prices, expected to be pressured higher, and the World Gold Council calling for weaker than normal seasonal demand from India and China, we think ETF selling and lower gold prices may continue near-term,” analysts at Bank of America said in a note.

Spot silver rose 2.5% to USD 23.27 per ounce and platinum was up 0.1% to USD 910.65. Palladium dropped 1.4% to USD 1,238.32.

(Reporting by Harshit Verma and Brijesh Patel in Bengaluru; Editing by Kirsten Donovan, Sandra Maler, and Krishna Chandra Eluri)