Gold Reclaims Key Technical Levels Amid Declining U.S. Yields

Precious metals extended their rally over the past 24 hours, with gold pushing to fresh multi-month highs closing above USD $4,500 per troy ounce (oz). Lower long-term U.S. Treasury yields, and a weaker U.S. dollar (USD) continued to support investor demand for safe-haven assets, with gold the standout beneficiary.  

The move above previous resistance levels as well as the 200 daily moving average, follows the U.S. Treasury's surprise expansion of longer-dated bond buyback operations (10Y, 20Y and 30Y), which helped ease long-term yields and improved sentiment toward non-yielding assets such as gold.  

Daily Performance 

• Gold: +0.2%, currently trading at USD $4,528 oz and AUD $6,358oz, +2.5% week to date.   

• Silver: +0.1%, currently trading at USD $68oz and AUD $95oz, +3.8% week to date. 

• Platinum: +0.1%, currently trading at USD $1,851oz and AUD $2,600oz, +4.3% week to date.  

Key Drivers 

• Falling long-term bond yields (US 30Y fell ~10bp from their 19 year high on Wednesday) and a softer USD (USD strength index or DXY -0.8% week-on-week) continue to improve the relative attractiveness of precious metals as non-yielding assets priced in USD. 

• Markets continue to price in a low probability of further Fed tightening in their upcoming September/October FOMC meetings, following softer recent economic inflation and jobs data.   

Any further decline in long-term yields could support additional upside for gold and silver, while a rebound in inflation expectations off the back of the US-Iran conflict remains the primary shor risk to the rally. 

Luke Tyler
Senior Analyst, ABC Bullion

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