Gold prices remained resilient on Wednesday, maintaining near-record levels reached last week, as investors sought safety amidst escalating geopolitical tensions in the Middle East. However, gains were tempered by a stronger U.S. dollar and rising Treasury yields.
Spot gold traded at $2,381.68 per ounce as of 0337 GMT, holding its ground after reaching an all-time high of $2,431.29 on Friday. Meanwhile, U.S. gold futures edged down 0.4% to $2,397.70.
The dollar remained robust, hovering near a five-month peak, which made gold less appealing to investors holding other currencies. Concurrently, the benchmark U.S. 10-year Treasury yields stood at 4.6591%, close to the five-month high touched in the previous session.
IG market strategist Yeap Jun Rong commented on the resilience of gold prices, noting, “Gold prices have been displaying resilience in the face of higher Treasury yields and a stronger U.S. dollar, while finding some support in safe-haven flows due to geopolitical risks, especially with tensions escalating between Israel and Iran.”
Jun Rong further added that any further escalation in geopolitical tensions could potentially push gold prices to retest their all-time highs.
Federal Reserve Chair Jerome Powell and other top U.S. central bank officials refrained from offering any guidance on potential interest rate cuts, emphasizing the need for restrictive monetary policy for an extended period. This stance has led to questions about the timing of rate cuts this year, with several global brokerages adjusting their expectations, now projecting the Federal Reserve to initiate rate cuts in September instead of June.
According to the CME FedWatch Tool, the market is currently pricing in a 68% chance of a rate cut in September. Lower interest rates generally increase the attractiveness of holding non-yielding assets like gold.
In other precious metals, spot silver rose 0.3% to $28.16 per ounce, while platinum declined 0.3% to $953.75. Palladium saw a modest gain, rising 0.4% to $1,017.58 per ounce.
The mixed performance across precious metals underscores the complex interplay between geopolitical tensions, monetary policy expectations, and currency dynamics influencing global markets. As investors continue to monitor these factors, gold’s safe-haven appeal is likely to remain a key driver of its price trajectory in the coming weeks.
