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Gold set to snap 5-week losing streak on softer dollar, yields

July 22, 2022By Reuters

July 22 (Reuters) – Gold headed for its first weekly gain in six on Friday as a pullback in US Treasury yields and the dollar’s decline bolstered non-yielding bullion’s safe-haven appeal as economic risks persisted.

Spot gold rose 0.2% to USD 1,721.29 per ounce by 2:21 p.m. EDT (1821 GMT). It was up about 1% so far this week, following a strong rebound from a more than one-year low of USD 1,680.25 on Thursday.

US gold futures settled 0.8% higher at USD 1,727.4.

Gold’s uptick was helped by a retreat in US 10-year Treasury yields.

Boosting gold’s allure for overseas buyers, the dollar index, also a rival safe haven, headed for its first weekly fall in four as disappointing US data dampened expectations of a large 100-basis-point interest rate hike by the Federal Reserve at its July 26-27 policy meeting.

The lower dollar, declining growth stocks and the dip in yields are all helping gold, said Phillip Streible, chief market strategist at Blue Line Futures in Chicago.

While the Fed meeting is likely to be a “high-volatility event” for gold, there may not be many steep hikes after the one next week, Streible added.

Rising US rates increase the opportunity cost of holding non-yielding bullion.

“Assuming the Fed hikes by 75 bps in July, we believe the bulk of the near-term downside risk has been priced in; but the longer-term trend is still to the downside,” Standard Chartered analyst Suki Cooper said in a note.

But gold could also find support from a price-responsive physical market and if recession risks deepen, Cooper added.

In physical markets, demand picked up in some Asian hubs this week amid softer prices.

Spot silver fell 1.7% to USD 18.53 per ounce, bound for its eight straight weekly decline.

Platinum shed 0.3%, to USD 869.56, while palladium XPD= rose about 5% to USD 1,986.50, en route to an about 9% gain for the week.

(Reporting by Ashitha Shivaprasad and Arpan Varghese in Bengaluru; Additional reporting by Arundhati Sarkar and Rahul Paswan; Editing by Paul Simao and Krishna Chandra Eluri)

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