Gold prices firmed on Monday, propped up by a subdued dollar and slight retreat in the U.S. Treasury yields, with investors gearing up for a week of speeches from U.S. Federal Reserve policymakers for cues on the central bank’s rate hike path.
Spot gold was up 0.5% at $1,759.06 per ounce, as of 0400 GMT, while U.S. gold futures were up 0.4% at $1,759.00.
While the dollar index softened, the benchmark 10-year Treasury yields eased after hitting their highest since early July. A weaker dollar offered support to gold prices, making bullion cheaper for holders of other currencies.
Asian shares got off to a cautious start on Monday amid a jump in oil prices and uncertainty over the Evergrande saga, as the Chinese firm missed a payment on offshore bonds last week, with further payment due this week.
Further gains in bullion were capped as benchmark 10-year Treasury yields hit their highest since early July, increasing the opportunity cost of holding the non-interest bearing gold.
A group of Fed officials are due to speak this week including Chairman Jerome Powell, who will testify this week before Congress on the central bank’s policy response to the pandemic.
A pair of Federal Reserve policymakers said on Friday they felt the U.S. economy is already in good enough shape for the central bank to begin to withdraw support for the economy.
Gold is often considered a hedge against higher inflation, but a Fed rate hike would increase the opportunity cost of holding gold, which pays no interest.
Fed Chair Jerome Powell is due to testify this week before Congress on the central bank’s policy response to the pandemic.
Gold Demand Rises
The physical demand of the yellow metal in top consumer China rose last week as buyers sought cover from the potential fallout of the Evergrande crisis coupled with factors including a seasonal pick-up in activity.
SPDR Gold Trust, the world’s largest exchange-traded fund backed by the precious metal, said its holdings increased 0.1% to 993.52 tons on Friday from 992.65 tons on Thursday.
Speculators cut their net-long positions in COMEX silver by 13,178 contracts to 900 in the week to Sept. 21, data from the U.S. Commodity Futures Trading Commission showed.
Silver rose 0.9% to $22.61 per ounce.
Platinum climbed 1% to $992.00, while palladium inched 0.1% higher to $1,973.47.