Gold edged higher on Tuesday as a weaker dollar, falling oil prices, and declining Treasury yields supported the metal. A Treasury plan to use its cash reserves to fund bond buybacks kept yields sliding, while traders awaited fresh inflation data and a Fed speech later in the week.
Spot gold added 0.2% to settle at $4,658.87/oz, while gold futures climbed 0.4% to settle at $4,716.40/oz. Traders held off on bigger moves ahead of this week's inflation data and a closely watched speech from Federal Reserve Chair Kevin Warsh at Jackson Hole on Friday.
Treasury buyback plan drives yields lower
U.S. Treasury yields extended their decline for a second straight day. A CNBC report said Washington could tap its near $1 trillion Treasury General Account to help fund increased buybacks of longer-term bonds announced last week.
Higher yields usually work like an interest rate increase, raising borrowing costs and strengthening the dollar. But last week's news that U.S. debt crossed $40 trillion unsettled investors instead, undoing the gains triggered by the buyback announcement and pushing some money out of the dollar into gold and cryptocurrency. Gold prices surged more than 5% last week as the dollar slid.
Technical picture turns supportive
According to Adam Turnquist, chief technical strategist at LPL Financial: "Gold's corrective phase increasingly appears to have run its course." He pointed to gold topping its post-January downtrend and moving back above its 200-day moving average, with cleaner investor positioning, a softer dollar, renewed investment demand, and a recovery in central-bank purchases adding support.
Oil slips on report of Iran ceasefire
Falling oil prices also helped gold. Brent crude futures slipped 5% to settle at $86.06 a barrel after Russia's RIA Novosti reported that the U.S. and Iran had reached a ceasefire agreement, citing Pakistani and Iranian military sources.
Treasury Secretary Scott Bessent said Iran's leadership was acknowledging that U.S. economic pressure was working, after unveiling new sanctions on Tehran under what he called Operation Economic Outcast. Iran played down the sanctions, saying it had been expecting them, and issued a joint statement with Oman on the safe resumption of navigation through the Strait of Hormuz.
Source: Investing.com
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