Gold prices

Gold Trades at Lowest in 6 Months Amidst Rising U.S Treasury Yields

Gold prices languished near multi-month lows on Tuesday, hurt by a rise in U.S. bond yields and a stronger dollar after robust U.S. jobs data last week raised bets over the Federal Reserve tapering stimulus earlier than expected.

Spot gold was little changed at $1,730.47 per ounce by 0039 GMT. On Monday, prices touched $1,684.37, their lowest since March 31 while U.S. gold futures edged 0.4% higher to $1,732.90 per ounce.

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XAUUSD technical performance chart.

The dollar index firmed near more than a two-week high, making gold more expensive for holders of other currencies.

U.S. Treasury yields rose to a more than three-week high as record-high job openings on top of stronger-than-expected employment gains in July added to the narrative of an improving labor market.

Job openings, a measure of labor demand, shot up by 590,000 to a record high of 10.1 million on the last day of June, the U.S. Labor Department reported in its monthly Job Openings and Labor Turnover Survey (JOLTS).

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U.S Jon openings data chart [Graph: Reuters]
Two Federal Reserve officials said on Monday that the U.S. economy is growing rapidly and that while the labor market still has room for improvement, inflation is already at a level that could satisfy one leg of a key test for the beginning of interest rate hikes.

Some investors view the yellow metal as a hedge against higher inflation, but a Fed rate hike would dull bullion’s appeal as that increases the opportunity cost of holding the non-yielding metal.

SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, said its holdings fell 0.2% to 1,023.54 tons on Monday from 1,025.28 tons on Friday.

Silver was steady at $23.43 per ounce after falling to an eight-month low in the previous session. Platinum edged 0.1% higher to $980.81 and palladium rose 0.1% to $2,603.20.

Also Read: Gold Steady at 4 Month High Supported by Dropping Treasury Yields