Gold: rebounds on falling Treasury yields and a weaker dollar; spot price up 2.8% to $4,456
Silver and platinum are also surging
(Il Sole 24 Ore Radiocor) - The fall in Treasury yields, following the massive buy-back programmes announced by the US government, has triggered a rush into gold. Gold is thus up 2.83 per cent to $4,456 per ounce in spot trading, returning to its highest level since early June, whilst futures are up 2.16 per cent to $4,460 per ounce. Other precious metals are also on the rise, from silver (+2.86 per cent to $65.14 spot and +2.2 per cent to $65.35 in futures) to platinum (+3.6 per cent to $1,775 spot and +2.09 per cent to $1,726 in futures).
The buying spree – whilst investors await guidance on the Fed’s next moves regarding interest rates, due to be revealed this evening in the Fed minutes – was driven, on the one hand, by the weakening of the dollar and, on the other, by the fall in global government bond yields, which had risen to record levels yesterday. In particular, the yield on 30-year Treasuries reached its highest level since 2007 yesterday, weighing on the price of gold, which fell by around 2 per cent yesterday.
Today, however, the US Treasury Department stated that it is “doubling the volume of repurchase agreements to support liquidity” in government bonds maturing between 10 and 30 years. These statements have given a boost to gold, which, following the weakness of recent months, had managed to climb back towards the $4,400 mark thanks to renewed investor demand and purchases by central banks, particularly in China. “In the short term, gold may struggle to find a clear direction, as markets weigh up persistent geopolitical tensions against the Fed’s evolving monetary policy path,” explains Jefferies. “However, the macroeconomic environment is gradually improving, thanks to easing price pressures and the strengthening case for the Fed to pause its rate hikes.” Therefore, according to the analysts, gold “is well positioned to extend its recovery beyond the $4,500 mark and emerge from the bear market”.
