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Markets

Gold hits 3-week peak on lower US bond yields

  • BofA sees gold averaging $1,828 in 2021
  • Spot gold hits peak since June 17 at $1,818.10/oz
08 Jul 2021

Gold edged higher on Thursday, having earlier climbed to a three-week peak, as easing US dollar and Treasury yields boosted the safe-haven metal's appeal.

Spot gold rose 0.2% to $1,806.09 per ounce by 10:25 a.m. EDT (1425 GMT), having earlier hit a peak since June 17 at $1,818.10. US gold futures were 0.2% higher at $1,805.50.

"The market is still getting signs from economic data that we're still pretty far away from substantial progress in the economy and getting the labor market back to where it needs to be for the Fed to raise interest rates," said Edward Moya, senior market analyst at OANDA.

Gold steady above $1,800/oz as lower yields counter stronger dollar

"Investors are kind of fleeing back to gold...You're probably going to see further momentum here if treasury yields continue to slide."

Benchmark US 10-year Treasury yields languished in a more than four-month trough, lowering the opportunity cost of holding non-yielding bullion.

Meanwhile, the dollar index fell 0.3%, making gold cheaper for other currency holders.

The number of Americans filing new claims for unemployment benefits rose slightly last week but continuing claims dropped, hinting at a choppy recovery in labor market recovery.

The bounce in gold came despite US Federal Reserve minutes from June 15-16 meeting showing "various participants" felt conditions for reducing the central bank's asset purchases would be "met somewhat earlier than they had anticipated".

The central bank's surprise hawkish tilt last month sent gold reeling 7% in June.

"While a pick-up of inflation should bring new buyers into the (gold) market, tighter monetary policy is set to keep the metal within recent ranges," BofA Global Research said in a note, forecasting gold to average $1,828 this year.

Market participants also took stock of the European Central Bank setting a new inflation target on Thursday.

Elsewhere, platinum and palladium were down 1.4% at $1,069.51 and $2,812.68 per ounce, respectively.

Silver fell 0.5% to $25.99 per ounce.

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