Back-To-Back Declines For Bullion As Long-Dated Yields Push Higher

Gold is +0.3% in the Asia-Pac session, after closing -0.5% at $1920.02 on Thursday. Bullion came under pressure from a sizeable twist steepening of the US Treasury curve with longer-dated yields up strongly. The 30-year bond’s yield rose 13bps to 4.57%, its highest level since 2011. The 10-year approached 4.5%, last seen in 2007.

• While the Bank of England followed the US Fed with a hawkish hold, stronger labour markets and persistent inflation raise the prospect of rates remaining higher for the foreseeable future.
• Bloomberg reports that Oanda analyst Edward Moya said the peak in US Treasury yields is almost here, but until recession risks become the base case for the US, the precious metal might struggle to stabilise.
• From a technical standpoint, Thursday’s close was a significant retracement off yesterday’s pre-FOMC high of $1947.5, although the low of $1913.98 didn’t test support at $1901.1 (Sep 14 low).
• With climate-related disruptions accelerating, the metal will almost certainly remain a safe haven during rough times, according to analysts at HSBC Global Research. (See link)