Gold prices firmed above recent lows on Tuesday, with the non-yielding asset holding ground despite US Treasury yields powering to nearly 16-year highs as investors look ahead to central bankers’ meeting this week for clues on interest rates.
Spot gold held its ground at $1,894.89 per ounce, hovering above a five-month low of $1,883.70 hit last week. US gold futures were flat at $1,923.50.
Following a week of back-to-back declines, gold on Monday settled 0.3 percent higher, reporting its best day in more than two weeks.
“Potential buyers have been waiting to see how far gold could fall, and this could be the beginnings of their re-entering the market in force,” said Clifford Bennett, chief economist at ACY Securities.
Any correction in the US dollar from recent highs could immediately ignite a strong gold market rally, he said.
The yield on 10-year Treasury notes hit highs last seen in November 2007 as a resilient US economy boosted the view that the Federal Reserve will keep interest rates higher for longer.
Higher rates increase bond yields and boost the dollar, making non-yielding bullion less attractive.
For an outlook on interest rates, comments from Fed Chair Jerome Powell on Friday will be monitored at a meeting of central bankers at Jackson Hole, Wyoming. – Reuters
