Despite an increase in US bond yields, gold remains stable in early trade

22 Aug 2023 , 09:36 AM

In spite of U.S. Treasury yields rocketing to nearly 16-year highs on Tuesday, gold prices continued to rise above recent lows as investors awaited this week’s conference of central bankers for signs regarding interest rates.

 Spot gold was holding steady at $1,894.91 per ounce, holding above last week’s five-month low of $1,883.70. To $1,923.90, U.S. gold futures saw a 0.1% increase.

After losing money for five straight sessions, gold saw its best day in more than two weeks on Monday, when it ended up closing roughly 0.3% higher.

 In November 2007, as the strong U.S. economy strengthened expectations that the Federal Reserve would maintain higher interest rates for longer, the yield on 10-year Treasury notes reached highs last seen during the Great Financial Crisis.

At a gathering of central bankers in Jackson Hole, Wyoming, on Friday, remarks from Fed Chair Jerome Powell will be watched closely for a view on interest rates. Bond yields rise when interest rates rise, decreasing the appeal of non-yielding bullion.

According to a study released by the New York Fed on Monday, American employees’ expectations for compensation increased in July despite their predictions for a marginally less robust employment market.

After months of advances in equity markets, cracks are starting to appear in the global stock rise as a result of rising bond yields, rising oil prices, and heightened concerns over China’s economy, among other factors.

Despite persistent inflation, the appeal of exchange-traded funds (ETF) backed by traditional safe-haven gold has been slowly declining this year due to diminishing concerns about a U.S. slowdown and rising bond yields.

The largest gold-backed ETF in the world, SPDR Gold Trust, reported that its holdings decreased by 0.10% on Monday.

Spot platinum increased 0.1% to $909.72 and spot silver declined 0.2% to $23.30 per ounce in other metals. At $1,245.53, palladium stayed steady.

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