Gold rises as US yields soften and markets eye upcoming jobs report

Gold prices edged higher on Thursday, supported by a pullback in the US treasury yields, while cautious investors awaited key US non-farm payrolls report due this week for more cues on the Federal Reserve’s rate-hike stance.

Spot gold was up 0.3% at $1,770.33/oz, as of 4.34am GMT. US gold futures rose 0.6% to $1,787.10.

Benchmark US 10-year treasury yields slipped from their highest levels in more than one week, reducing the opportunity cost of holding non-interest-bearing gold.

“Most of the investors are on the sidelines because there are tensions brewing between US and China, so people are not sure what is going to happen,” said Brian Lan, MD at dealer GoldSilver Central.

“Furthermore, there is also another area that people are thinking that if interest rates are going up, probably holding the dollar might make more sense than holding gold. So I expect gold prices to be rangebound in the near term.”

Limiting gold’s advance, the dollar hovered near its highest level this week after hawkish comments from Fed officials.

Fed policymakers this week signalled that the central bank remains resolute in getting US rates up to a level that will more significantly curb economic activity and put a dent in the highest inflation rate since the 1980s.

Rising US interest rates dull non-yielding gold’s appeal.

After a couple of strong economic readings this week, focus now shifts to US jobs data due on Friday that could offer more clarity on the Fed’s aggressive tightening to fight stubborn inflation.

Indicative of sentiment, holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, fell to their lowest level since mid-January at 1,000.65 tonnes on Wednesday.

Meanwhile, US House of Representatives speaker Nancy Pelosi left Taiwan on Wednesday, adding that Chinese anger cannot stop world leaders from travelling to the self-ruled island claimed by Beijing.

Spot silver eased 0.1% to $20.01/oz, platinum was down 0.3% at $895.48, and palladium was steady at $2,018.08. 

Reuters