Gold Prices Dip Below $4,300 Amid Stronger Dollar and Higher Bond Yields

Gold prices have struggled to maintain gains above $4,300 per ounce due to a stronger US dollar and higher bond yields. Despite this, commodity analysts at BMO Capital Markets believe that gold's resilience in the face of these headwinds is evidence of its disconnect from opportunity costs.

The bank points out that investment demand has remained strong, with investors continuing to hedge against debasement-related themes and concerns about US fiscal sustainability. This is reflected in the recent influx of $4.2 billion into global gold-backed exchange-traded funds (ETFs), pushing total holdings near levels seen before the Middle East conflict.

Physical demand is also showing signs of improvement, particularly in India where local market discounts are narrowing due to resilient wedding-related buying. Chinese imports and ETF purchases are also contributing to healthy underlying investment demand.