Spot gold prices have had a choppy Monday but have largely trapped within a $1720-$1730 range. Spot prices have remained well supported above the 21-day moving average at $1721, with US Dollar weakness since the arrival of US market participants also helping to keep gold supported. At present, the precious metal trade flat on the day.
US Dollar weakness (the Dollar Index has fallen from above 93.00 into the 92.50s over the past few hours) is assisting to support dollar-denominated spot gold. Still, gains are being capped by a jump in US government bond yields from last Thursday’s levels; 10-year yields are back comfortably above the 1.70% mark following last Thursday’s close under 1.68% and real yields are also a little higher, with the 10-year TIPS yield up about 3bps.
As a reminder, non-yielding precious metals tend to have a negative correlation to the real yields on fixed-income assets, so when yields go up, precious metals become comparatively less attractive.
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