Gold prices recovered on Friday, supported by a decline in US Treasury bond yields and an appetite for safe-haven assets. However, the position of US Federal Reserve officials, which tends to raise interest rates, means that gold is on its way to incurring a second consecutive weekly loss.
By 14:25 GMT, spot gold rose to $1927.90 an ounce, after falling close to a three-month low earlier in the session. The yellow metal experienced a 1.5 percent decline during the week.
US gold futures, on the other hand, rose 0.8 percent to $1,938.20.
The decline in gold prices came as Wall Street’s main indices fell and are expected to incur weekly losses. This was due to comments made by US Central Bank President Jerome Powell and other officials, which fueled fears that interest rates will continue to rise for a longer period.
In addition, the yield on the benchmark US Treasury bonds for ten years fell to its lowest level in ten days. This reduction in bond yields reduces the opportunity cost of owning gold, which does not yield a return.
Looking at other precious metals, spot silver rose 0.9 percent to $22.44 an ounce. However, it is on track to record the largest weekly loss since October 2022.
Platinum also experienced a decline of 0.3 percent to $920.38, marking its worst weekly performance since August 2022.
Palladium fell 0.5 percent to $1,277.46, hitting its lowest level since May 2019 in the previous session.
Overall, while gold prices recovered slightly on Friday, the position of US Federal Reserve officials and the decline in bond yields indicate that gold is likely to incur a second consecutive weekly loss. Investors will continue to monitor the market closely for any further developments that may impact the price of gold and other precious metals.
What role did the decline in US Treasury bond yields play in the recent recovery of gold prices
Gold Prices Show Signs of Recovery Amid Decline in US Treasury Yields
Gold prices saw a slight recovery on Friday, thanks to a drop in US Treasury bond yields and an increased demand for safe-haven assets. However, the outlook for gold remains uncertain due to the stance of US Federal Reserve officials, who are inclined to raise interest rates. As a result, gold is on track to experience its second consecutive weekly loss.
As of 14:25 GMT, spot gold rose to $1927.90 per ounce, bouncing back from earlier lows that brought it close to a three-month low. Despite this recovery, the yellow metal recorded a 1.5 percent decline for the week.
Contrarily, US gold futures showed more promising results, rising by 0.8 percent to $1,938.20.
The decline in gold prices coincided with a fall in Wall Street’s main indices, which are expected to report weekly losses. These losses were primarily driven by comments made by US Central Bank President Jerome Powell and other officials, fueling concerns that interest rates will continue to rise for a longer period.
Furthermore, the yield on the benchmark US Treasury bonds with a ten-year maturity hit its lowest level in the last ten days. This decline in bond yields reduces the opportunity cost of holding gold, as the precious metal does not generate a return.
As for other precious metals, spot silver increased by 0.9 percent to $22.44 per ounce. However, it is also on track to record its largest weekly loss since October 2022.
Platinum experienced a slight decline of 0.3 percent, reaching $920.38 per ounce. This marked its worst weekly performance since August 2022.
Palladium fell by 0.5 percent to $1,277.46, reaching its lowest level since May 2019 in the previous session.
In conclusion, although gold prices showed some signs of recovery on Friday, the position of US Federal Reserve officials and the decline in bond yields suggest that gold is likely to experience a second consecutive weekly loss. Investors should closely monitor the market for any further developments affecting the price of gold and other precious metals.
While gold prices may be recovering temporarily due to increased safe-haven demand, the looming rise in interest rates suggests that weekly losses are still expected. Investors should remain cautious amidst the dynamic market conditions.