Gold Defies Rising Yields, Holds Above $4,420 Amid Softer US Data

Gold has defied expectations by holding above $4,420 an ounce despite rising long-term yields. The US 10-year Treasury yield climbed to about 4.72%, while the 30-year yield touched 5.32%, its highest level since 2007. This should have made non-yielding bullion less attractive, but gold has absorbed the move, suggesting rate expectations are not the only force at work.

The market's shift in favour of gold is also due to softer US data and a weaker dollar. July's consumer inflation eased to 3.4% from 3.5% in June, helping markets price roughly a 65% chance that the Fed leaves rates unchanged in September. The central bank kept its target range at 3.5%-3.75% in July.

Investment demand has also improved: global physically backed gold ETFs attracted $3 billion in July, while holdings increased by 23 tonnes to 4,068 tonnes, according to the World Gold Council. This gives the market a firmer base than a rally driven purely by short-term Fed positioning.