Gold climbed higher, helped by a continued decline in Treasury yields, as traders weighed concerns that central banks’ monetary tightening will lead to recession and the possibility that bond rates may have reached a peak.
Bullion extended its first weekly gain in three, as lower bond rates boosted the appeal of the non-interest bearing asset. Silver gained the most since February 2021 as traders bought back their previously short positions with the dollar and bond yields moving lower.
Traders will now look to US jobs data due on Friday for more clues on the future path of central bank monetary policy. That means bullion could be in for more volatility, with strong numbers potentially spurring further gains in bond yields that would be harmful for gold. Investors continue to abandon the metal at pace, with hedge funds trading the Comex hiking their short bets for the seventh week running as of Tuesday. Exchange-traded funds have seen outflows for 16 straight weeks, according to an initial tally by Bloomberg. Bullion has dropped almost 9 per cent this year.
“Gold holds above Friday’s low at US$1,660, supported by geopolitical and financial risks and a cooling of the recent dollar and yield surge,” said Ole Hansen, head of commodity strategy at Saxo Bank A/S.“The price needs to break the critical resistance zone into US$1,678-US$1,690 that is the departure point for this latest bear-market move.”
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