Gold Prices Rebound Amid Lower Yields Ahead of Hawkish Fed Minutes

Gold prices rebounded to around $4,350 an ounce in Asian hours on Wednesday as US Treasury yields retreated. The benchmark 10-year Treasury yield eased towards 4.70% and the 30-year yield slipped from levels near a 19-year high.

The move leaves gold caught between two forces: softer economic data reducing expectations for another Fed rate increase, but high oil prices and lingering fiscal concerns keeping inflation and long-term borrowing costs elevated.

Wednesday's Federal Reserve meeting minutes are expected to provide clues on how broad support for tighter policy may be. CME FedWatch pricing still points to a September hold as the more likely outcome, while expectations for an increase have eased following softer US economic readings.

OANDA senior market analyst Kelvin Wong sees the retreat in rate-hike expectations and concerns over government finances as supportive for gold, but notes that investors are demanding greater compensation for inflation and fiscal risk. The recent jump in long-dated sovereign yields shows the relationship is becoming less straightforward.