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Gold range-bound as dollar, T-bond yields pick up steam

August 3, 2022By Reuters

Gold prices traded in a tight range on Wednesday, pressured by a stronger dollar and Treasury yields as hawkish comments from US Federal Reserve officials pulled the metal further away from last session’s one-month peak.

Spot gold rose 0.1% to USD 1,761.76 per ounce by 2:37 p.m. ET (1837 GMT), seesawing in a roughly USD 20 range, while US gold futures fell 0.7% to USD 1,776.4.

The dollar index rose 0.2%, making dollar-priced gold more expensive for other currency holders. US 10-year Treasury yields also jumped to their highest in nearly two weeks.

“Some Fed speakers have repeated an aggressive stance, which is keeping inflow (in gold) limited,” Edward Moya, senior analyst with OANDA, said. “However, global recessionary fears are to put an end to these aggressive rate hikes, so gold should maintain a bullish trend”.

San Francisco Fed President Mary Daly said on Wednesday raising interest rates by 50 basis points next month would be reasonable, if the economy evolves as expected.

A high interest rate environment makes bullion less appealing as it yields no interest.

Worsening ties between Washington and Beijing over US House of Representatives Speaker Nancy Pelosi’s visit to Taiwan had pushed gold to its highest since July 5 on Tuesday at USD 1,787.79.

Gold is considered a safe investment amid geo-political and economic uncertainties.

Investors await US jobs data due on Friday.

“Friday’s employment figures are likely to offer more clarity on what the path of the Fed’s tightening is likely to be, with an upside surprise likely to reinforce expectations of a more hawkish central bank and therefore weigh down on gold,” said Ricardo Evangelista, senior analyst at ActivTrades.

Spot silver rose 0.2% to USD 20.00 per ounce, platinum XPT= was up 0.5% to USD 898.21, while palladium fell 1.8% to USD 2,024.73.

Analysts have sharply lowered their price forecasts for platinum and palladium as the global economic slowdown reduces demand, a Reuters poll showed.

(Reporting by Ashitha Shivaprasad, Arundhati Sarkar and Swati Verma in Bengaluru; Editing by David Holmes and Krishna Chandra Eluri)

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