Mubasher: Gold prices slid on Monday as the precious metal partially lost its safe-haven appeal, spurring investors to lock in profits, amidst a rebound in stock markets and higher US Treasury yields, Reuters reported.
By 10:45 am GMT, spot gold dropped by 1.06% to $1,497.45 per ounce, while US gold futures fell by 0.90% to $1,509.90 per ounce.
Share markets worldwide rallied, with European equities extending its second consecutive session of gains, as investor worries eased by signs of moves by Germany as well as China to counter a sluggish economy.
Moreover, benchmark US Treasury yields rose, moving further away from record troughs hit after the closely watched yield curve between the two-year notes and their 10-year counterparts inverted for the first time since 2007 on Wednesday.
“The rally in bond markets seems to have paused at least for now and we’ve seen some additional gains in stocks over the weekend, so a bit of a more optimistic start to the week is helping to attract profit taking in gold,” Saxo Bank commodity strategist Ole Hansen was quoted by the news agency.
In addition, President Donald Trump and senior White House officials ruled out worries about a slowdown in US economic growth and risks of recession.
Market participants are currently waiting the US Federal Reserve’s symposium this week for further clarity on the future trajectory of interest rates, while traders saw an 83.7% chance of a 25 basis-point cut in September.
It is worth noting that lower interest rates reduce the opportunity costs of holding non-yielding metal and drag the dollar, making the yellow metal more affordable for non-US currency holders
Nevertheless, at 10:46 am GMT, the US dollar index inched up by 0.08% to 98.22, hovering near the two-week peak recorded in the prior session.
“Given the policy uncertainties that may or may not unfold later in the week from Jackson Hole symposium, gold could consolidate with a downward bias before eventually resuming its upward momentum,” a note by VM Markets managing partner Stephen Innes was quoted by Reuters.
