Gold steady as lower US yields offset dollar
Gold prices held steady as falling US Treasury yields countered a firm dollar, keeping bullion supported near recent highs amid shifting rate expectations.
Gold prices were little changed on Thursday as a decline in US Treasury yields offset pressure from a stronger dollar, leaving bullion trading near recent record levels.
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Spot gold hovered around the $2,300-per-ounce mark in early Asian trade, stabilizing after recent volatility driven by shifting expectations over US interest rates. US gold futures also moved within a narrow range as investors assessed macroeconomic signals.
The US dollar index remained firm against major currencies, typically weighing on dollar-priced commodities such as gold.
However, benchmark US 10-year Treasury yields slipped, reducing the opportunity cost of holding non-yielding assets like bullion. Lower yields tend to enhance gold’s appeal during periods of policy uncertainty.
Market participants are closely watching signals from the Federal Reserve regarding the timing of potential rate cuts. Recent US economic data have painted a mixed picture, with resilient labor markets but moderating inflation indicators.
According to the US Bureau of Labor Statistics, consumer inflation eased from its 2022 peak but remains above the Fed’s 2% target.
Gold has gained more than 10% this year, supported by safe-haven demand and sustained central bank purchases.
The World Gold Council reported that global central banks added over 1,000 tonnes of gold to reserves in 2023, marking one of the strongest annual buying periods on record. Emerging market institutions have led diversification efforts amid geopolitical tensions and currency volatility.
The metal’s rally has coincided with heightened geopolitical risks and persistent concerns over global growth. Investors have sought protection against potential shocks, including conflicts in the Middle East and trade frictions among major economies.
Exchange-traded fund flows, however, have shown mixed trends. Holdings in major gold-backed ETFs have fluctuated as speculative positioning adjusts to interest rate expectations. Analysts say sustained gains will likely depend on clearer guidance from US policymakers.
Silver edged higher in tandem with gold, while platinum and palladium traded in narrow bands. Broader commodity markets reflected caution as traders awaited further economic data releases.
Lower Treasury yields have been driven partly by expectations that the Federal Reserve may ease policy later this year if inflation continues to moderate. According to the CME FedWatch Tool, investors currently price in at least one rate cut before year-end, though timing remains uncertain.
A stronger dollar, however, continues to cap gold’s upside. When the greenback appreciates, bullion becomes more expensive for holders of other currencies, dampening international demand.
Analysts say gold’s resilience near historic highs underscores underlying structural demand. Continued central bank accumulation, portfolio diversification, and geopolitical hedging have provided a solid floor under prices even as currency markets fluctuate.
With investors balancing dollar strength against easing bond yields, gold appears locked in a consolidation phase. Future direction will hinge on US economic data, Federal Reserve guidance, and broader risk sentiment shaping global financial markets.