Gold rises as weaker dollar counters U.S. bond yields rally
Gold items displayed in a Luk Fook Holdings International jewellery store in Hong Kong. Picture: BLOOMBERG/LAM YIKGold prices rose on Wednesday, buoyed by a slightly weaker dollar that offset surging US bond yields and the lingering fear over sooner-than-expected interest rates hikes.
US benchmark 10-year treasury yields surged to their highest since May 20 on Wednesday, raising the opportunity cost of holding non-yielding bullion. “Gold continues to hang in there, but I think the writing is on the wall and as soon as the Fed makes a more hawkish pivot, gold could ignore higher inflation and trend lower,” said Stephen Innes, managing partner at SPI Asset Management.
Though persistent inflation is likely to be the greater risk for the US economy over the coming year, most economists in a Reuters poll expect the Federal Reserve to wait until 2023 before raising interest rates.
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