Gold price consolidation likely to remain a temporary breather amid rising US bond yields and strong dollar: Report
New Delhi, July 28
Gold prices are entering a crucial phase after a subdued week of trading, however, the pause is likely to be a temporary breather within the broader downtrend as rising US real and bond yields, along with a strengthening US dollar, continue to weigh on bullion, says World Gold Council.
As per the report, the yellow metal has witnessed a relatively quiet week with the market extending its consolidation above the USD 3,943/oz June low.
At the same time, the US real yields have seen a further sharp move higher with the 10-year US TIPs yield threatening to exceed its 2025 high at 2.44 per cent as markets have brought forward expectations for the next Fed hike.
"A sustained break above that level would signal that the core trend has shifted from sideways to higher, which we suspect would have negative implications for equity markets and would likely weigh on gold too," it said.
Gold rebounded last week, with the London Bullion Market Association (LBMA) gold price Post-Meridiem (PM) surging 1.8 per cent w/w to USD 4,067/oz, reclaiming the USD 4,000/oz level -- recovering its y-t-d decline to 6.9 per cent. "Dip-buying helped support gold as it held above US$4,000/oz despite higher yields and a stronger dollar," it said.
"From a technical perspective, last week's bounce may just be a temporary breather in gold's downtrend that has been in place from January - with the next key technical support at US$3,857-3,887/oz," it noted.
At the time of reporting, the yellow metal was trading at around USD 4,048.98.
As per World Gold Council, there are high expectations from US Federal Reserve to keep interest rates unchanged this week. However, any hawkish signals from the Federal Open Market Committee (FOMC) during Wednesday's press conference, or an upside surprise in Thursday's Personal Consumption Expenditures (PCE) inflation data, could renew downward pressure on gold by pushing up Treasury yields and strengthening the US dollar, the report noted.
— ANI
Reader Comments
As someone who follows global markets closely, this makes sense. The US bond yields are rising because they expect more rate hikes, and a strong dollar always hurts gold. But let's not forget that India's festival season is coming up - Dhanteras and Diwali will definitely boost demand here. Local prices might not fall as much as international ones.
Gold is the only thing that gives peace of mind in this volatile market. Stocks go up and down like anything, but gold always holds value in the long run. This temporary dip is a buying opportunity if you ask me. Already told my jeweller to keep some coins aside. 🪙
Honestly, with inflation in India still high and the rupee weakening against dollar, gold is still a safe bet. The report says bearish trend but for Indians, gold is not just investment - it's cultural. My grandmother always said, "Gold never sleeps." Wise words.
Disappointing to see gold struggling. I invested heavily in gold ETFs last year thinking it would go up with global uncertainty. Now I'm stuck. But I guess that's the nature of these markets. The report's analysis about US yields and dollar strength seems correct. Hope it recovers soon. 🙏
Watching from the US here - completely agree with the analysis. The bond market is screaming for higher rates, and the dollar is on fire. Gold will likely test those supports around $3,857-3,887. But for Indian investors, the rupee depreciation might cushion the fall in INR terms.
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