Gold steady as traders weigh dollar retreat, rising bond yields

Gold is holding near an 11-month low as investors weigh the US dollar’s retreat against rising Treasury yields amid improving sentiment in markets.

Bullion has hovered in a narrow trading range, closing little changed since Friday, as a gauge of the greenback extended losses in a sign of waning haven demand. Treasuries held a decline that’s taken the 10-year yield back above 3%. Holdings in gold-backed exchange-traded funds have dropped for 15 days, the longest stretch since March 2021, according to initial data compiled by Bloomberg.

Traders are awaiting more clarity on central bank action to tackle searing inflation. The European Central Bank may consider raising interest rates on Thursday by double the quarter-point it outlined just last month, according to people familiar with the situation. The Federal Reserve’s meeting on July 26-27 will also be closely watched.

“There’s actually scope for a relief rally coming up to the July FOMC meeting where we can see a little bit of a bounce and perhaps prices heading back toward $1750 in the near term,” Suki Cooper, a precious metals analyst at Standard Chartered Plc, said in a Bloomberg TV interview, referring to the policy-setting Federal Open Market Committee.

For gold to really rally, the ETF outflows would have to stabilise, and a lot of the downside risk has to be priced in by markets, Cooper said. The price floor provided by physical demand is quite vulnerable in the near term as the seasonally slow period for gold consumption is now starting, she added.

Spot gold was little changed at $1 707.69 an ounce as of 9:38 a.m. in London. Prices dipped below $1 700 last week for the first time since August. The Bloomberg Dollar Spot Index was little changed after dropping 0.5% in the previous session. Silver and platinum edged up while palladium declined.