Gold gains as Treasury yields dip; hawkish Fed caps upside

GOLD prices edged higher on Thursday (Oct 6) as Treasury yields retreated, although gains were limited after stronger US economic data bolstered expectations the Federal Reserve will retain its hawkish narrative.

Spot gold was up 0.2 per cent at US$1,719.19 per ounce, as of 1.44 am GMT.

US gold futures rose 0.5 per cent to US$1,728.50.

Benchmark US 10-year Treasury yields eased after recording its biggest one-day jump since Sep 26 on Wednesday, while the dollar index was steady.

Lower yields decrease the opportunity cost of holding gold, which pays no interest.

San Francisco Federal Reserve president Mary Daly on Wednesday underscored the US central bank’s commitment to curbing inflation with more rate hikes, even as she said the Fed will not simply barrel ahead if the economy starts to crack.

On Wednesday, the ADP National Employment report showed private employers increased hiring last month, while separately the Institute for Supply Management’s (ISM) non-manufacturing PMI reading came in slightly above expectations, suggesting underlying strength in the economy despite rising interest rates.

Investors are likely to shift focus to US nonfarm payrolls data due on Friday.

Holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, rose 0.18 per cent to 946.34 tonnes on Wednesday, their third straight day of inflows.

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Spot silver fell 0.3 per cent to US$20.64 per ounce, platinum was steady at US$919.11 and palladium rose 0.7 per cent to US$2,262.32. REUTERS