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0 News Ghana, Latest Updates and Breaking News of Ghana, Roger A. Agana, https://newsghana.com.gh/gold-maintains-gains-despite-rising-treasury-yields-and-economic-concerns/
Gold has extended its upward momentum for a third consecutive day, reaching $2,660 per ounce in spot transactions.
This rise in gold prices comes amid concerns about the slow pace of interest rate cuts in the United States and a continued increase in Treasury yields, despite stronger-than-expected U.S. economic data and inflation readings. These factors typically exert downward pressure on gold, but the yellow metal has managed to resist these forces and maintain its gains.
A report from the World Gold Council highlighted several complex dynamics at play. Despite rising Treasury yields, which are typically seen as a negative factor for gold, the precious metal has seen significant inflows, particularly from Asian and European exchange-traded funds (ETFs). In December, these regions recorded net positive inflows of $778 million, counterbalancing outflows from North American ETFs. The report suggests that uncertainty surrounding the future of the Chinese economy and the potential effects of ongoing trade tensions with the U.S. have led to increased demand for gold in Asia. Similarly, Europe’s weak economic outlook has contributed to a rush towards gold as a safe-haven investment.
Geopolitical factors in Europe, the Middle East, and Southeast Asia have further fueled uncertainty, benefiting gold as a secure store of value. Additionally, gold has managed to weather the rise in Treasury yields thanks to the prevailing uncertainty in the U.S. bond market. When the ICE BofAML U.S. Bond Market Option Volatility Estimate (MOVE) crosses 100 points, indicating heightened uncertainty, higher Treasury yields become less of a threat to gold.
The renewed focus on the U.S. deficit, which could worsen under the incoming Trump administration, is also contributing to volatility in the U.S. bond market, which may make gold more resistant to yield increases.
Attention now shifts to labor market data, due to be released tomorrow. Even if the numbers come in better than expected, the high level of uncertainty in the bond market may make any downward pressure on gold only temporary.
News Ghana, Latest Updates and Breaking News of Ghana, Roger A. Agana, https://newsghana.com.gh/gold-maintains-gains-despite-rising-treasury-yields-and-economic-concerns/
