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Bullion Proved Resilient Despite A Higher USD, US Yields Lower

GOLD

Gold is slightly weaker in the Asia-Pac session, after closing +0.25% at $1925.23 on Friday. Bullion proved resilient despite the climb in the USD, with the precious metal supported by a rally in US Treasuries.

  • Traders slightly unwound bets on another rate hike this year on Friday, with key US inflation data due this week (PCE deflator on Thursday) set to show a deceleration.
  • US Treasuries closed the week with a relief rally. Cash US Treasuries finished 3-6bps richer, with the belly outperforming. The 10-year yield touched a new 16-year high of 4.5064% before finishing 6ps lower at 4.43%. Friday's better close came despite ‘higher for longer’ messaging from Fedspeak, which reinforced the Fed’s "hawkish hold" earlier in the week. US Treasuries drew support after Flash PMI data came out mixed.
  • Hedge funds boosted their bullish bets on gold to a six-week high, the latest CFTC data on futures and options show, further underscoring bets on a rate hike pause.
  • According to MNI’s technicals team, resistance remains a way off at $1947.5 (Sep 20 high), the high shortly before the FOMC decision.

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