Outperforming Other Commodities

Gold has spent the start of this week respecting recent ranges. Dips below $1740 have been supported, but we haven't been able to muster a re-test above $1745. We last tracked just under $1742

• In terms of cross asset drivers today, a firmer USD has helped cap any upside impetus for gold. The DXY is back above 107.30, +0.30% on closing levels from the end of last week.
• US yield momentum has stayed positive, but there hasn't been a great deal of follow through, with the 2yr yield up less than +1bp at this stage to 3.11%, following a strong bounce during Friday’s domestic US session.
• The trend last week was for higher US real yields, as Fed rhetoric remained hawkish and US NFP data painted to a strong labor market picture on Friday. The US 10yr real yield ended last week at +72bps. Arguably though golds dip through $1750, from earlier last week, had already arguably discounted such a move.
• Equity sentiment is more supportive for the precious metal, with falls in China related bourses, on renewed Covid concerns evident. This has also weighed on US equity futures, which are now comfortably in the red.
• Such a backdrop has likely helped gold outperform other commodities on the day, with oil, copper and iron ore lower on demand concerns.