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Gold rises above $1,700 an ounce, dollar and yields fall

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  • Gold rose above the $1,700 per ounce level on Tuesday on the back of a retreat in the dollar and US Treasury yields, as investors expect the Federal Reserve to slow its pace of monetary tightening.

* Spot gold was up 0.48% at $1,708 per ounce by 1006 GMT, having hit its highest since September 13 at $1,710.49 earlier in the session.

* US gold futures were up 0.95% at $1,718.10.

* “Bad news is good for gold now. Basically, if we get worse economic data out of the US, then the market will believe we are closer to a spike in rates,” said Ole Hansen, chief commodity strategist at Saxobank.

* “Gold is not out of the woods yet, but at least we have seen a very strong rebound. The first move has been driven by short hedging.”

* Gold started the quarter on a strong note, posting its biggest daily percentage gain since March on Monday, as slowing US manufacturing activity raised hopes the Fed might be less aggressive going forward.

* Yields on 10-year Treasury bonds hit a nearly two-week low as the dollar index extended its decline, making gold cheaper for holders of other currencies.

* “Investors have begun to price in a less aggressive Fed and revised expectations are reflected in higher demand for Treasuries, lower yields and a corresponding weakening of the dollar,” Ricardo Evangelista, senior analyst at ActivTrades, said in a note.

* The Fed has hiked rates aggressively since March and US central bank officials have signaled that more rate hikes are needed to control inflation.

* Attention now turns to US Non-Farm Payrolls data due out on Friday which could offer more clarity on the Fed’s tightening of monetary policy.

* Among other precious metals, silver rose 0.3% to $20.87 an ounce, having hit its highest since June 29. Platinum was up 0.64% at $914.65 an ounce and palladium added 2.54% to $2,285.30.

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