Gold Falters Near $4,300 as Hawkish Fed and Rising Yields Test Safe-Haven Trade
Gold prices continued to struggle near $4,300 on Friday as a stronger dollar and rising US Treasury yields tested investor appetite for the non-yielding metal. Spot gold was up 0.2% at $4,288.36 an ounce by 0200 GMT, while US futures gained 0.6% to $4,323.10.
The market is focusing on whether safe-haven demand can withstand a more hawkish Federal Reserve and borrowing costs above 5%. The dollar index was heading for a roughly 1% weekly advance near 101.25, while the 10-year Treasury yield traded around 5.19% after touching 5.2251%, its highest in 19 years.
Gold's latest pullback reflects a familiar problem: higher yields raise the opportunity cost of holding an asset that pays no interest. According to MUFG strategist Soojin Kim, gold is being pulled in opposite directions by geopolitical uncertainty and restrictive US monetary policy.
The immediate question is whether gold can reclaim and hold the $4,300 area after dropping to a weekly low around $4,244 on Thursday. FXStreet analyst Dhwani Mehta said that bullion remained vulnerable while trading below important daily moving averages, even after recovering from Thursday's low.