Gold Prices Rebound as US Bond Yields Stabilize

Gold prices have recovered slightly after falling to almost 2% on Tuesday. The precious metal rose as much as 0.6% to trade above $4,360 an ounce, following a selloff in US bonds that had sent yields on 30-year notes to the highest in nearly two decades.

The recent surge in flows into precious metals appears to be easing, according to Ryan McKay from TD Securities. Gold has been supported by renewed investor demand and central-bank buying, particularly from China, where it has traded around $4,400 an ounce.

However, the dimming prospects for a peace deal between the US and Iran may keep a lid on further gains. The memorandum of understanding signed in June has expired with no plan to extend it, buoying oil prices and putting pressure on the Federal Reserve to raise interest rates, which is negative for bullion.

The next clues on the Fed's rate path will come later Wednesday with the release of the minutes from its July policy meeting, followed by chairman Kevin Warsh's speech at the Fed's annual Jackson Hole symposium next week.