On Tuesday, the precious yellow metal gold futures’ prices had revived some of its safe-haven appeal following a sharp downturn in US Treasury bond Yields alongside a slide in US Dollar Index (DXY) earlier in the day, as a sweeping plunge in service sectors activities last month as cited by a survey data from Tempe-based ISM (Institute of Supply Management) had heavily weighed on market participants’ morale who had been awaiting minutes from the US Fed’s latest policy meet due on Wednesday.
In point of fact, both FX and equity traders remained utterly cautious on Tuesday as the minutes from the US Federal Reserve’s latest policy meet are expected to provide further clues on a plausible beginning of taper-talks alongside a rate-hike.
On top of that, in recent weeks, a number of Fed policymakers including James Bullard alongside US Treasury’s Yellen had made hawkish remarks over a probable rate-hike alongside a tapering of fiscal support amid a blistering inflationary pressure, souring the bullion’s safe-haven appeal.
Nevertheless, a weaker-than-anticipated ISM services sector data coupled with an intensifying investors’ caution ahead of Wednesday’s FOMC minutes, had plunged the US Treasury yields to a two-week low with 10-year fixed Treasury bond notes hovering at 1.37 per cent, well below a 14-month peak of 1.74 per cent hit a couple of months earlier, while US Dollar Index (DXY) rose 0.33 per cent to 92.54 following a late-session drive into the blacks.
Earlier in the day, Institute of Supply Management (ISM) data had revealed that the ISM’s index for US non-manufacturing PMI (Purchasing Managers’ Index) had pummelled to 60.1 last month following an all-time high of 64.0 in May, underscoring a long-drawn labour market weakness alongside a shortage of raw materials.
Gold gains as US Treasury bond notes fall
Citing statistics, in the day’s commodity market wind-down, spot gold gained 0.2 per cent to $1,794.37 per ounce after hitting a session high of $1,814.78 an ounce, as a $1,800 psychological handle seems to be blowing the gaff on the bullion’s play after breaking off a $1,790 per ounce technical barrier on a 200-day moving average, while US gold futures’ prices gained 0.6 per cent to $1,794.2 an ounce.
Among other precious metals, silver futures’ prices had faltered 1.3 per cent to $26.10 after climbing to a three-week peak of $26.76 per ounce earlier in the day, while platinum and palladium contracts had shed 1.1 per cent and 0.6 per cent respectively to $1,085.53 and $2,797.74 per ounce.
Meanwhile, adding major Central Banks around the globe had been petering out the concept of a hawkish monetary policy while helping the bullion’s causes, an analyst with ThinkMarkets Fawad Razaqzada, said, “What we’ve seen in the last few days is central banks are dismissing the idea of raising interest rates prematurely.
Investors are realizing that monetary policy will remain historically very loose and that’s one of the reasons why we’re seeing bond yields go down, which is helping stabilize gold prices after falling sharply in June. ”