PRECIOUS gold is down as the rebound in US bond yields weakens its appeal

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B.and Nakul Iyer

October 15 (Reuters)Gold fell on Friday as US bond yields rebounded, although a depressed dollar helped the precious metal hit its best week since late August.

Spot gold XAU = fell 0.7% to $ 1,783.18 an ounce by 0920 GMT. US gold futures GCv1 slipped 0.7% to $ 1,785.80.

The pull of gold from the increase in opportunity cost weakened the yield on 10-year US Treasuries, which rebounded from more than a week-long low on Thursday.

“Expectations are growing that the Fed and other central banks will tighten monetary policies, which should support yields, and when yields rise gold tends to struggle,” said Fawad Razaqzada, analyst at ThinkMarkets.

“However, investors are likely to expect only moderate tightening from major central banks, and that shouldn’t get gold in too much trouble as investors hedge against increased price levels.”

While most Fed politicians agree that the central bank could cut their monthly bond purchases as early as next month, they are deeply divided on inflation and what to do about it.

Gold is often viewed as a hedge against inflation, although reduced incentives and rate hikes will drive government bond yields higher and increase the opportunity cost of holding unprofitable precious metals.

Investors are now waiting for US retail sales data due at 1230 GMT.

“While gold was at the 100- and 200-day moving averages of around $ 1,797, analysts respectively wrote in a note.

Gold remains on track with a weekly increase of 1.4% as the dollar index = USD weakened slightly, lowering gold prices for buyers holding other currencies. USD /

Spot silver XAG = fell 1% to $ 23.30 an ounce but was heading for its biggest weekly gain in seven years.

platinum XPT = => fell 0.5% to $ 1,050.12 while palladium XPD = rose 1.2% to $ 2,154.39.

(Reporting by Nakul Iyer in Bengaluru; Editing by Jason Neely)

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The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.


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