Spot gold added 1% to $4,399.14 an ounce on Wednesday as traders digested a Treasury bond sell-off, a jump in Brent crude past $100 a barrel, and a muted dollar. Traders now wait on Thursday's producer price data and Friday's consumer inflation report for signs of a Federal Reserve rate hike.
Spot gold rose 1% to $4,399.14 an ounce on Wednesday, while gold futures ticked up 0.1% to $4,444.20 an ounce. The gains came even as a sell-off in U.S. government bonds pushed yields higher, a move that typically weighs on non-yielding assets such as bullion.
Bond sell-off complicates the rally
The benchmark 10-year Treasury yield climbed 3.8 basis points to 4.842%, up from a rise of 1.2 basis points before the U.S. Treasury Department said it would buy back up to $6 billion in 10-year to 20-year maturities. That is up from $2 billion previously, after the department said last month it would raise buybacks to at least $4 billion. The 2-year yield rose 2.7 basis points to 4.425%.
That sell-off had been driven by inflationary concerns tied to soaring oil prices, jitters over debt issued to fund artificial-intelligence infrastructure, and worries over the size of U.S. national debt. As a result, all eyes are now on Thursday's August producer price index report and Friday's consumer price index data, which could tilt odds toward a Fed hike next week.
David Morrison, senior market analyst at Trade Nation, pointed to the metals' link with the dollar. According to Trade Nation: "correlations, positive and negative, invariably break down", he said, noting the current inverse relationship between gold and the dollar has held for more than seven months.
Brent tops $100 as U.S.-Iran clashes intensify
Brent crude futures jumped 3.7% to $101.57 a barrel, topping $100 for the first time since May 26, as military engagements between the U.S. and Iran showed no sign of ending. U.S. Central Command said Tuesday it had destroyed five Iranian crude oil carriers after the Islamic Revolutionary Guard Corps targeted a U.S. Navy warship.
Iran's state media said Tehran responded by hitting two American vessels, eight oil tankers, 10 U.S.-backed ships, and a U.S. military base in Jordan. Jordanian officials, however, said 18 of 20 Iranian missiles were intercepted, while the remaining two fell on unpopulated areas. U.S. Secretary of State Marco Rubio warned Iran it would lose tankers if it targets U.S. naval ships again, signaling the standoff is unlikely to end soon.
Source: Investing.com
Trading involves risk.
Risk Disclaimer
