Bond yields and a falling US dollar both help gold in early trade

29 Aug 2023 , 10:22 AM

As the dollar and Treasury yields dropped from recent highs ahead of critical U.S. inflation and jobs data this week that might determine the outlook for interest rates, gold prices increased on Tuesday.

Spot gold reached its highest level since August 10 on Monday and was up 0.1% to trade at $1,921.69 per ounce. At $1,949.30, U.S. gold futures were up 0.1%.

In contrast to a basket of other major currencies, the U.S. dollar fell, and benchmark 10-year Treasury rates retreated from the 2007 highs reached last week.

Gold, which pays no interest, typically costs less for holders of foreign currencies when the dollar is weaker.

Focus will be on the Federal Reserve’s preferred inflation indicator, the U.S. PCE price index due on Thursday, and the non-farm payrolls report due on Friday, among a slew of economic data slated to be issued this week.

The globe may be facing a slow-growth future that stalls development in some nations even before it begins due to record levels of government debt, geopolitical tensions that pose a danger to the stability of the international trading system, and the propensity for sluggish productivity improvements to continue.

Robert Holzmann, a policymaker at the European Central Bank, told Bloomberg News in an interview on Monday that if there are no significant shocks in inflation statistics before its next meeting in September, there is a case for raising interest rates even more.

According to government statistics, Japan’s unemployment rate increased from the prior month to 2.7% in July.

The largest gold-backed exchange-traded fund in the world, SPDR Gold Trust, said that its holdings increased on Monday by 0.3% to 886.64 metric tonnes.

Spot silver dropped 0.2% to $24.22 an ounce in other trading, and platinum held steady at $964.90 after opening at its highest level in a month. To $1,247.36, palladium fell 0.6%.

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