Gold prices inch up amid treasury yield decline

Shafaq News / Gold prices rose on Tuesday as the USD and Treasury yields fell after traders slightly pared bets for an interest rate cut by the Federal Reserve in the first quarter of 2024.

Spot gold gained 0.2% to $2,032.70 per ounce by 0750 GMT. Bullion had surged to an all-time high of $2,135.40 on Monday, before dropping more than $100 in a single day to close 2% lower.

US gold futures for February delivery rose 0.5% to $2,051.70. Making gold less expensive for other currency holders, the dollar index (DXY) fell 0.1%, while yields on 10-year Treasury notes slipped to 4.2375%.

Even after the dramatic moves in gold prices over the past 24 hours, "for now, the overall trend for gold still looks bullish," said Ilya Spivak, head of global macro at Tastylive.

A wave of profit-taking seems to have been triggered after gold rallied at the weekly open, to catch up to Fed Chair Jerome Powell's dovish comments from Friday, along with "pre-positioning ahead of this week's event risk," added Spivak.

However, traders have lowered their Fed rate cut bets by March next year to about 60%, from 70% on early Monday, CME’s FedWatch Tool shows.

Investors are awaiting the closely watched US non-farm payrolls data on Friday. Which could help further gauge the interest rate outlook. Lower interest rates reduce the opportunity cost of holding non-interest-bearing bullion.

The Middle East Conflict and the fear of it spreading has driven money into the yellow metal, said FXCM market specialist Russell Shor.

Spot gold may test support of $2,009 per ounce, a break below which could open the way towards $1,980, according to Reuters technical analyst Wang Tao.

Spot silver rose 0.1% to $24.47 per ounce, palladium fell 0.6% to $970.43 per ounce, while platinum slipped 0.7% to $909.88.

(Reuters)