Daily Times

Spot gold price dipped on Thursday amid a stronger US dollar despite the benchmark 10-year US Treasury bond yield retreated.

As of 1400 hours GMT, gold in the international market was available at $1,839.30 per ounce, shedding $13.40 (-0.72 percent). Out of the $13.40 per ounce decrease, -$9.75 was due to strengthening of the US dollar and -$3.65 was due to predominant sellers, according to Kitco Gold Index. The price of 10 grams of 24-carat yellow metal in Pakistan, decreased to Rs113,400 after shedding Rs100. Gold price in the local market settled at Rs113,500 on Wednesday last. A relatively lower decrease in the local gold prices was due to Pakistani rupee’s depreciation against the US dollar during the day. The benchmark 10-year US Treasury bond yield retreated more than 3 percent; however, a stronger dollar capitalised on safe-haven flows and weighed on gold prices. The Treasury yields dropped seven basis points (bps) to 2.84 percent, the lowest level since April 29. It should be noted that the US Dollar Index (DXY) remained firmer around 104.00, after refreshing a two-decade high of 104.21 earlier in the day. The pullback in the yield could well be linked to the mixed comments from the Federal Reserve policymakers.

Gold struggled to capitalise on the overnight post-US CPI gains and witnessed subdued/range-bound price action. The gold prices seesawed between tepid gains/minor losses. The latest US consumer inflation readings came in higher-than-expected and reinforced market bets for a more aggressive policy tightening by the Federal Reserve. This, in turn, pushed the US dollar to its highest level in nearly two-decades and dented demand for the dollar-denominated gold.

The prospects for rapid interest rate hikes in the US, along with strict Covid-19 lockdowns in China, have been fuelling concerns about softening global growth and a possible recession. This continued weighing on investors’ sentiment and was evident from an extended sell-off in the equity markets, which extended some support to the safe-haven gold. The global flight to safety, coupled with signs that inflationary pressures in the world’s biggest economy are peaking, dragged US Treasury bond yields higher. This was seen as another factor that helped limit any deeper declines for the non-yielding yellow metal.