Steady After Being Down Sharply On Tuesday

Gold is little changed in the Asia-Pac session, after closing -0.8% at $1900.65 on Tuesday, off a low of $1899.24. Bullion’s decline appeared attributable to the combination of a stronger USD and yields hovering at cycle highs.

• US tsys gave up early gains to finish slightly mixed. The fear of a higher-for-longer policy stance by global central banks continued to weigh and was exacerbated after JPMorgan's Dimon noted the potential for a 7% rate as a worst-case scenario. Additionally, the threat of a government shutdown this weekend and Moody's ratings warning probably left bond buyers sidelined.
• The US Treasury 10-year yield finished at 4.54%, just below its highest level since 2007, after being 8bps lower in early trade.
• From a technical standpoint, Tuesday’s low for gold tested $1901.1 (Sep 14 low) after which lies the bear trigger at $1884.9 (Aug 21 low).
• The market for bullion in China has surged this month, at times commanding a record premium over international prices of more than $100 an ounce, compared with an average over the past decade of less than $6. (See link)