Gold knocked back after rebound in US bond yields

Gold prices were little changed last week after a sharp fall on Friday wiped out earlier gains, as a rebound in US bond yields and a surprise increase in September retail sales dented bullion’s safe-haven status.

The afternoon fixing on Friday in London was $1,772.65 an ounce, compared with $1,773.25 a week earlier. Thai selling prices were quoted at 28,050 baht per baht-weight (15.2 grammes), down 150 baht from the previous week.

“Gold has everything going against it. Real rates are rising, equities are higher, so is bitcoin,” said Phillip Streible, chief market strategist at Blue Line Futures in Chicago.

US retail sales unexpectedly increased in September, boosting equities, and extending losses in risk-hedging gold.

Raising gold’s opportunity cost, US benchmark 10-year Treasury yields recovered from the one-week low they had reached on Thursday.

While most US Federal Reserve policymakers agree that the central bank could start reducing its monthly bond purchases as soon as next month, they remain sharply divided over inflation and how they should respond to it.

Investors are likely expecting only a moderate tightening from major central banks and “that shouldn’t cause too much of a problem for gold as investors hedge against elevated price levels”, said Fawad Razaqzada, an analyst with ThinkMarkets.

In the physical market, price premiums returned in India as key festivals ushered in jewellery buying, while a rally in domestic prices pushed up premiums and curbed demand in top consumer China.

The December quarter usually accounts for about a third of India’s gold sales as it takes in the start of the wedding season as well as festivals like Dussehra and Diwali.

“Retail demand has improved to pre-pandemic levels. Jewellery stores are witnessing very good footfall in urban and rural areas,” said Ashish Pethe, chairman of the All India Gem & Jewellery Domestic Council.

Consumer confidence has also improved with decreasing coronavirus cases and a recovery in economic activity, he added.