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Gold rises despite higher yields and more hawkish rate expectations

Markets now price about a 71% probability of a September Fed rate hike, and the US 10-year Treasury yield has climbed to 4.63%.

Reported · Written up by our desk · Precious Metals

Gold and silver have extended gains despite a backdrop that has typically pressured precious metals, with prices moving higher even as Brent crude stays above $92 and US Treasury yields rise. Action Forex notes that the rally is especially notable because it appears to run counter to the macro factors that weighed on gold and silver through much of the second quarter, when higher oil fed inflation expectations, lifting yields and tightening expectations.

According to the outlet, markets are pricing roughly a 71% probability of a Fed rate hike in September, up from about 58% a week earlier, while the US 10-year Treasury yield has reached 4.63%. In the usual framework, those conditions would be bearish for non-yielding assets like gold and silver because higher policy expectations raise yields and strengthen the opportunity cost of holding metal.

Action Forex suggests the divergence could reflect a shift in how investors interpret the oil shock, with attention possibly broadening beyond inflation timing to other impacts of persistently elevated crude prices. The article also says gold had been kept under sustained pressure earlier this year even as periodic geopolitical demand appeared, as the broader “higher yields, stronger policy expectations” environment dominated.

Latest closeGold $3,981.40 ▼1.6%|Silver $55.72 ▼2.4%|WTI crude $79.00 ▼0.8%

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