Gold prices have decreased for the second consecutive day, currently trading at $3,019, down 0.81%. The market’s mood remains subdued, with the US Dollar Index at 104.05.
US Treasury yields are on the rise, impacting Gold prices negatively. The 10-year T-note yield is at 4.246%, with real yields increasing to 1.918%.
Central Bank Gold Reserves
Central banks added a record 1,136 tonnes of Gold worth about $70 billion in 2022. Emerging economies are notably increasing their Gold reserves.
Gold typically rises when the US Dollar weakens and faces challenges when interest rates increase, affecting its appeal as an investment.
Prices for the metal have dipped again, now hovering around the $3,019 mark. A drop of 0.81% reflects the broader hesitation in the markets. Meanwhile, the US Dollar Index sits at 104.05, showing steady performance. Traders are watching the bond market’s movement quite closely, as rising US Treasury yields put pressure on Gold. The 10-year Treasury yield has climbed to 4.246%, while real yields, which consider inflation, now stand at 1.918%. These increases make interest-bearing assets more attractive, a factor that historically limits demand for non-yielding commodities.
Looking at recent years, central banks have been steadily increasing their reserves, particularly in emerging economies. They bought a record 1,136 tonnes in 2022, worth about $70 billion. This pattern suggests ongoing interest from official institutions, often seeking stability amid concerns about currencies.
Impact Of Interest Rates On Gold
We know that Gold’s performance is closely tied to movements in the US Dollar and interest rates. When the Dollar weakens, this commodity tends to gain in value, as it becomes cheaper for foreign buyers. Rising interest rates, however, do the opposite, pulling demand away toward assets that offer returns.
With recent bond yield increases, traders should stay alert to any shifts in Federal Reserve policy or economic data that might influence rate expectations. Further increases in yields could bring more pressure, while any hints of a softer stance on rates could help stabilise or lift prices again. At the same time, central bank demand remains a key factor to track, particularly from developing nations that continue to adjust their reserves.
