Dubai gold prices rise as treasury yields cool-off

Dubai: Gold prices climbed overnight after strong demand at a 30-year US Treasury auction pulled long-dated yields back from their highest levels in more than two decades.

The metal gained over 1 per cent to trade near $4,180 an ounce. It had touched a two-month low earlier this week. Lower Treasury prices drew buyers to Thursday’s 30-year sale, which pushed yields down across maturities. That eased pressure on gold, an asset that pays no interest.

In the UAE, prices saw an increase of roughly Dh7 per gram, where 24 karat gold climbed back above Dh500 per gram. Currently gold is trading at Dh504.50 versus the Dh497.75 on October 8. 22- karat has also increased to Dh467 while 18 karat is now trading at Dh384 per gram.

Lower oil prices also helped gold. President Donald Trump said he would hold off on striking Iran before the US midterm elections and called talks with Tehran productive.

Christopher Wong, strategist at Oversea-Chinese Banking Corp, attributes this morning’s rebound mainly to calmer conditions in the US Treasury market. High yields, oil prices and a stronger dollar had weighed on gold. Wong told Bloomberg that easing yields have “provided an opportunity for some buying to return.”

Traders expect US borrowing costs to hold steady later this month and rise over the medium term. Alberto Musalem, president of the St. Louis Federal Reserve, indicated on Thursday that rates should climb over the next six to nine months to bring inflation back to the Fed’s 2 per cent target. He stopped short of backing a hike at this month’s policy meeting.

Gold gained 1.1 per cent to $4,182.56  an ounce. Silver rose 1.86 per cent to $60.26 an ounce, wiping out the previous session’s losses. Platinum and palladium also moved higher, while the Bloomberg Dollar Spot Index slipped slightly.