Gold steadies as US dollar, yields pull back from recent highs

GOLD prices bounced back on Wednesday (Aug 9) from one-month lows as bond yields and US dollar weakened a day ahead of the release of US consumer price data that could build the case for or against further interest rates hikes.

Spot gold was up 0.1 per cent at US$1,926.29 per ounce by 0117 GMT, having dropped to the lowest level since July 10 at US$1,922 on Tuesday. US gold futures were flat at US$1,960.30.

The US dollar index was off previous session’s highs, while longer-dated US Treasury yields fell on Tuesday after Moody’s cut its credit ratings on several small- to mid-sized US banks.

US and European bank stocks dropped on Tuesday on renewed investor worries about the health of the industry after ratings agency Moody’s downgraded several US lenders and Italy approved a surprise 40 per cent windfall tax on its lenders.

The US trade deficit narrowed sharply in June as businesses cut back on purchases of foreign-made capital goods, resulting in imports falling to the lowest level in more than 1½ years.

There is still time for Federal Reserve officials to study data before deciding if further rate increases are needed, Richmond Fed president Thomas Barkin said on Tuesday.

While, Philadelphia Fed president Patrick Harker said US central bank may be at the stage where it can leave interest rates where they are, barring any abrupt change in the direction of recent economic data.

Investors are eyeing gains in emerging markets stocks and a cooling of their currencies amid an unprecedented global decoupling in the direction of interest rates.

Barrick Gold beat analysts’ expectations for second-quarter profit on Tuesday, as the Canadian gold miner benefited from higher prices of the precious metal.

SEE ALSO

Gold faces weekly loss on surging bond yields as US payrolls loom

Spot silver gained 0.2 per cent to US$22.79 an ounce and platinum eased 0.2 per cent to US$898.15. Palladium rose 0.4 per cent to US$1,225.39. REUTERS