Spot gold climbed to $4,169.74 an ounce on Tuesday morning in New York as a pullback in Treasury yields lifted the metal off a two-month low. The bounce tracks the bond market almost tick for tick, and traders now watch whether a reversal pattern holds or the slide toward $4,100 resumes.
Spot gold traded at $4,169.74 an ounce on Tuesday morning in New York, up $29.27, or 0.71%, from Monday's $4,140.47 close. Sellers had driven the metal through last week's low of $4,110.87 during Asian hours and found nothing underneath, pushing the session low to $4,103.52, the weakest price in two months. December futures on Comex rose $32.70 to $4,189.50, a 0.79% advance, after trading as high as $4,197.60 before the U.S. equity open.
Yields drove the bounce
The 10-year Treasury yield eased to 5.27% before the bell from Monday's 5.31% close, the highest finish in 24 years. Four basis points of relief in the long bond was enough to lift a market that had been sold for six sessions. The dollar index held near 102 after reaching 102.535 on Monday, and the Federal Reserve is still in tightening mode after raising rates in September. Gold is trading as a rates instrument, and the bond market will decide whether $4,103.52 holds. Until spot closes above $4,230.51, the long-term 61.8% retracement level and the neckline of a head-and-shoulders top, rallies are corrective.
Measured against its history, the metal is 25.5% below its January record of $5,595.46 and 7.3% above its 52-week low of $3,886.49. Over twelve months the price is up 5.27%.
The Fed's October decision is settled, December is not
Futures now assign a 78% probability that the committee leaves rates unchanged at this month's meeting, after a soft September jobs report calmed the October outlook. December is less settled. Markets still price a meaningful chance of another interest rate increase before year-end. The September services survey showed prices paid rising at the fastest pace in more than four years. The September consumer price index follows on October 14, and a hot reading would revive October hike odds from 22% and lift December pricing with them.
A daily close under $4,100 is the trigger most technical models are keyed to. The published targets beneath it run to $4,040 and the $4,000 round number, where structural buyers that have supported this market all year are expected to show up.
Source: Investing.com
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