KEY POINTS
- Gold traded near $4,160 an ounce on Friday after rising 1.6 per cent in the previous session.
- A selloff in technology stocks and a rally in government bonds pushed US Treasury yields lower, supporting bullion.
- Spot gold fell 0.3 per cent to $4,158.03 an ounce at 7:48 a.m.
- Investors were awaiting comments from Federal Reserve Chairman Kevin Warsh at an IMF meeting in Bangkok.
- Silver declined 0.5 per cent, while platinum and palladium were largely unchanged.
MAIN STORY
Gold prices steadied near $4,160 an ounce on Friday after recording their biggest one-day gain in more than two weeks, as falling US Treasury yields and demand for safer assets supported the precious metal.
Spot gold was down 0.3 per cent at $4,158.03 an ounce at 7:48 a.m., after rising 1.6 per cent during Thursday’s session.
The recovery followed a selloff in technology stocks, particularly chipmakers, as concerns about the scale of investment in artificial intelligence weighed on investor sentiment. The shift towards government bonds triggered a broader bond market rally, pushing Treasury yields lower and supporting gold prices.
Treasury yields fell by as much as 12 to 15 basis points across the yield curve. Lower yields tend to support gold because the metal does not pay interest, making it relatively more attractive when returns on interest-bearing assets decline.
Gold also recovered losses recorded after US inflation data for September came in hotter than expected on Wednesday, prompting increased market bets on an interest rate hike in October.
Investors were looking ahead to remarks by Federal Reserve Chairman Kevin Warsh at an International Monetary Fund meeting in Bangkok, scheduled for 10:30 a.m. local time. His comments were expected to be assessed for indications about the direction of US monetary policy.
Elsewhere in the precious metals market, spot silver fell 0.5 per cent to $57.13 an ounce, while platinum and palladium were largely unchanged. The Bloomberg Dollar Spot Index was flat after declining 0.3 per cent in the previous session.
THE ISSUES
Gold’s latest movement reflects the influence of interest rate expectations and shifts in investor risk appetite. Falling Treasury yields can support bullion, while expectations of higher interest rates may weigh on it by increasing the relative attractiveness of interest-bearing investments.
The technology stock selloff also highlighted how changes in investor sentiment can redirect funds towards assets perceived as safer during periods of market uncertainty. However, gold’s direction will continue to depend on developments in inflation, monetary policy and financial markets.
WHAT’S NEXT
Investors will monitor Federal Reserve Chairman Kevin Warsh’s comments for clues about US interest rate policy, alongside further inflation data and movements in Treasury yields. These factors could influence demand for gold and other precious metals.
BOTTOM LINE
Gold steadied near $4,160 an ounce after a strong Thursday advance, supported by falling Treasury yields and market uncertainty. The outlook remains sensitive to US inflation and interest rate expectations, which will help determine the metal’s appeal relative to interest-bearing assets.
Source: Bloomberg
