Gold Price Rises as Falling Bond Yield Increases Appeal



File image of freshly produced pure gold bars at the Krastsvetmet non-ferrous metals plant in the Siberian city of Krasnoyarsk, Russia.  November 22, 2018. REUTERS/Ilya Naymushin
File image of freshly produced pure gold bars at the Krastsvetmet non-ferrous metals plant in the Siberian city of Krasnoyarsk, Russia. November 22, 2018. REUTERS/Ilya Naymushin

By Arundhati Sarkar

Aug 2 (Reuters) – Gold rose on Tuesday as falling US Treasury yields and growing recession fears offset resistance from a relatively firm dollar.

* As of 1026 GMT, spot gold was up 0.2% at $1,775.29 per ounce, after reaching its peak from July 5, at $1,780.39, at the beginning of the session. US gold futures were also up 0.2% at $1,791.10.

* Falling real rates in the United States have supported gold in recent days and the next big thing for the metal is Friday’s payroll report, UBS analyst Giovanni Staunovo said.

* However, he added that further interest rate hikes by the Federal Reserve and lower inflation should weigh on prices over the next six months.

* Yields on 10-year notes hit a four-month low, lowering the opportunity cost of holding non-interest-bearing bullion as the dollar index stabilized after hitting a four-week low.

* Gold has recently benefited from a series of disappointing economic data, as a survey on Monday showed that factories in the United States, Europe and Asia struggled to gain momentum last month.

* Traders are also keeping an eye on a possible escalation in tension between China and the United States, as House Speaker Nancy Pelosi begins a visit to Taiwan over Beijing’s objections.

* In other precious metals, spot silver fell 0.4% to $20.26 an ounce, capping a five-day rally; platinum was up 0.3% at $909.10; and palladium was down 1% at $2,171.66.

(Reporting by Arundhati Sarkar and Brijesh Patel in Bengaluru; edited in Spanish by Carlos Serrano)





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