Gold Rises, US Yields Fall, Reducing Dollar Pressure
Gold prices strengthened on Friday (July 24th) despite the continued strength of the US dollar. Spot gold traded around US$4,065 per troy ounce, up 0.38%.
Gold's rise was supported by falling US government bond yields. The 10-year Treasury yield fell three basis points to 4.667%, easing pressure on the non-yielding precious metal.
The US Dollar Index edged up to 101.46 and is headed for a weekly gain of more than 0.60%. A strong dollar typically constrains gold because it makes it more expensive for buyers using other currencies.
Gold sentiment was also helped by falling oil prices. WTI weakened 3.83% to US$88.79 per barrel, although still heading for a weekly gain of more than 8.50%.
Data-wise, the US manufacturing PMI fell slightly to 53.8 from 53.9 and was below the forecast of 54.5. Conversely, the services PMI rose to 53.6 from 51.2, exceeding market projections of 51.
The market now estimates a 41% chance of the Federal Reserve raising interest rates by 25 basis points at its meeting next week, while the chance of keeping rates unchanged is 59%. As long as US yields and oil prices continue to decline, gold has the potential to maintain its gains, although a strong dollar and expectations of interest rate hikes remain a drag.
Source: Newsmaker.id
