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Gold Dips As Long-term Bond Yields Rebound

Gold prices were slightly lower on Monday following a slight uptick in U.S. Treasury yields, as investors took stock of the latest developments in the Middle East and looked ahead to a speech by Fed Chair Jerome Powell later this week for more clarity on the interest rate outlook.

Spot gold dipped 0.3 percent to $1,986.72 per ounce, while U.S. gold futures were down 0.3 percent at $1,993.65.

U.S. long-term bond yields rebounded while the dollar remained on the back foot, helping cap bullion’s downside.

Many Federal Reserve policymakers including Fed Chair Jerome Powell, and officials from the BoE and ECB are due to speak this week as investors await more clarity on the outlook for rates. Powell will speak on Wednesday.

It is widely believed that the Fed may not hike interest rates any further. Futures markets currently imply an 86 percent chance the first policy easing would come as soon as June.

Markets also expect the European Central Bank to cut rates by April, and the Bank of England in August.

The Reserve Bank of Australia is expected to resume rates at a policy meeting on Tuesday to control stubborn inflation. Earlier today, BOJ governor said the country was making progress toward stable inflation and monetary conditions will remain sufficiently accommodative to support economic activity.

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