Gold regained ground on Wednesday as easing US Treasury yields offered some relief to the precious metal following a sharp sell-off in the previous session, with investors now turning their attention to the Federal Reserve’s July meeting minutes for clues on the interest rate outlook.
Spot gold rose 0.6% to US$4,359.58 an ounce by 0737 GMT, after falling nearly 2% on Tuesday as higher Treasury yields weighed on the non-yielding asset. US gold futures, however, slipped 0.2% to US$4,413.40.
The recovery comes as markets assess the likelihood of further Federal Reserve action. Traders are currently pricing in a 67% probability of the Fed keeping rates unchanged next month and a 33% chance of a rate hike, according to the CME FedWatch Tool.
The minutes of the Federal Open Market Committee’s July meeting are due at 1800 GMT, with investors looking for further indications of how policymakers view the path for rates.
A global bond sell-off on Tuesday pushed long-term borrowing costs in major economies towards multi-decade highs, putting pressure on gold. Lower interest rates, meanwhile, tend to support gold by reducing the opportunity cost of holding the non-yielding asset.
Kelvin Wong, senior market analyst at OANDA, said reduced expectations for Federal Reserve interest rate hikes and rising fiscal budget concerns were positive factors for gold.
RHB Investment Bank Bhd (RHB Research) meanwhile maintained a positive trading bias on COMEX gold despite Tuesday’s profit-taking. The research house said gold had given up US$52.30 to close at US$4,387.80 after reaching an intraday high of US$4,459.30 before sliding to a low of US$4,352.
RHB Research said the latest bearish candlestick suggested bullish momentum was losing pace, with the commodity potentially pulling back towards its 20-day simple moving average if selling pressure continued.
The research house identified US$4,300 as immediate support and said it would maintain its long position as long as gold remained above that level. Its next support level is at US$4,100, while resistance stands at US$4,650 followed by US$4,900.
Separately, Lukman Otunuga, head of market research at FXTM, said, “A sustained break above $4,390 could open the door (for gold) towards $4,505, while a break below $4,300 could expose $4,200 and $4,150.”
Elsewhere in precious metals, spot silver slipped 0.1% to US$63.22 an ounce while platinum gained 0.5% to US$1,720.43. Palladium was unchanged at US$1,290.55.
Oil prices also rose for a fourth consecutive session as uncertainty surrounding exports through the Strait of Hormuz continued to support the energy market.
