Gold under pressure from high US bond yields in holiday trading week

NEW YORK: Gold prices slipped on Friday as elevated US Treasury yields dimmed non-yielding bullion’s allure in a holiday-thinned week, with markets focused on President-elect Donald Trump’s return to office and the potential impact of his inflationary policies on the Fed’s 2025 outlook.

Spot gold fell 0.8% to $2,614.64 per ounce, as of 10:29 a.m. ET (1529 GMT) and US gold futures were down 0.9% to $2,630.10. “Treasury yields are a little bit higher here, and gold will remain under pressure through the end of today ... we are here in a thin holiday market,” said Bob Haberkorn, senior market strategist at RJO Futures.

The dollar index headed for a fourth-straight week of gains, reducing gold’s appeal for holders of other currencies, while the benchmark US 10-year yields were trading near their highest level since May 2, which they hit on Thursday.

So far this year, gold has surged 27%, hitting a record high of $2,790.15 on Oct. 31. The rally was fuelled by the Federal Reserve rate-easing cycle and heightened global tensions. Most analysts remain bullish for 2025, despite the Fed now projecting fewer rate cuts.

They believe pockets of geopolitical tensions around the globe will remain elevated, central banks will continue their robust gold-buying spree, and political uncertainty will linger as Trump returns to the White House in January. His proposed tariffs and protectionist trade policies are also expected to spark potential trade wars, adding to gold’s allure as a safe-haven asset.

“Next year with central-bank buying, I can see gold topping $3,000 at some point, probably by the summer, if gold continues on the pace that it’s been on,” Haberkorn said. Gold traditionally shines during periods of economic and geopolitical turmoil and thrives in a lower interest-rate environment. Spot silver fell 1.4% to $29.39 per ounce, platinum was down 2.1% at $916.59, palladium shed 1.6% to $910.27.