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All that glitters: gold drifts despite lower Treasury yields

By Kyle Rodda

13:00, 7 November 2023

Gold prices have declined despite a drop in Treasury yields and a weaker US Dollar. We look at the key drivers and technical levels for the gold price.

Lower yields fail to stoke demand for gold

Gold has drifted in the past week despite a meaningful drop in Treasury yields and the US Dollar. The US 10-year yield has oscillated in a wide range between 5% and 4.5%, with yields currently trading at the lower end of the range. More importantly for gold, real yields have also receded from more than two-decade highs. The move in yields came following some softer-than-expected ISM business activity data and US jobs data, as well as dovish rhetoric from US Fed Chair Jerome Powell following the central bank’s decision to hold rates steady last week.

(Source: Bloomberg)

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 Easing geopolitical risk weakens gold’s safe haven bid

A part of the reason for gold’s insensitivity to the moves in the bond market is that the price had already diverged from that fundamental driver following the flare-up of geopolitical risks stemming from the Israel-Hamas war. While there remains the risk of a broader conflict in the Middle East, a less intense escalation in the conflict has weakened the demand for gold as a safe-haven asset.

Gold long positions climb for the third week

Although gold prices have pulled back in the past week, COMEX data reveals that traders added to long positions. Net long positioning increased for the third week in a row, possibly as traders bought into the news of the rising prospect of war in the Gaza Strip. Positioning has reverted towards longer-term averages; however, it remains below levels consistent with a very bullish market and implies there could be more buyers waiting on the sidelines.

Oil - Crude

81.34 Price
-0.850% 1D Chg, %
Long position overnight fee 0.0440%
Short position overnight fee -0.0659%
Overnight fee time 21:00 (UTC)
Spread 0.030

Natural Gas

2.32 Price
+1.850% 1D Chg, %
Long position overnight fee -0.0162%
Short position overnight fee -0.0057%
Overnight fee time 21:00 (UTC)
Spread 0.0050

Oil - Brent

84.58 Price
-0.610% 1D Chg, %
Long position overnight fee 0.0284%
Short position overnight fee -0.0504%
Overnight fee time 21:00 (UTC)
Spread 0.032

Silver

30.82 Price
-2.110% 1D Chg, %
Long position overnight fee -0.0205%
Short position overnight fee 0.0123%
Overnight fee time 21:00 (UTC)
Spread 0.040

(Source: World Gold Council, Comex)

Past Performance is not a reliable indicator of future results. 

Gold pulls back as upside momentum fades

As is being conveyed by the daily RSI, upside momentum has faded for gold. Sellers defended the $2000 level, with diminishing fears about war in the Middle East putting downward pressure on prices. In the short term, gold has pushed through support around $1980, with buyers also defending the 20DMA. The next level of support could be at $1950; a daily close above $2000 could indicate a renewed move higher.

Past performance is not a reliable indicator of future results

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