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Gold holds below $4,500 as dollar firms after hawkish FOMC minutes
Gold was pressured by a steadier US dollar tied to Fed officials signaling they may need to raise rates soon, but sliding long-dated yields capped further losses after Treasury expanded buybacks.
Gold prices edged lower in Asia and remained below $4,500, staying close to the highest level reached in early June, according to FXStreet.
The outlet links the move to a US dollar that stabilized after slipping the prior day to a three-month low, helped by hawkish messages in July 28-29 FOMC minutes. Federal Reserve officials indicated they would likely need to raise interest rates soon unless there was more progress on reducing inflation, while recent monthly inflation readings stayed modestly positive and remained well above the Fed’s 2% target.
FXStreet also points to inflation fears tied to higher energy costs amid the Middle East crisis and risk related to the US-Iran standoff, which keeps a war-risk premium in play and supports the US dollar as a safe haven. At the same time, retreating US bond yields limited the downside for bullion.
Further support for gold came after the US Treasury said it would at least double buyback operations for long-dated government debt starting in September, which drove the 30-year yield down from its highest level since June 2007. FXStreet notes TD Securities said the larger liquidity support buyback program gave metals renewed interest, and traders are now watching the next US economic releases, including the Philly Fed Manufacturing survey.
Latest closeGold $4,432.00 ▲1.6%