EBC Markets Briefing | Gold prices steady on shaky Treasuries

Gold prices steadied on Wednesday after hitting a more than two-week low on lower odds of flaring tensions in the Middle East. But the fragile bond market may help stem the decline.

The 2-year Treasury yield remained around the five-month high. The market is nearing levels that risk triggering a large selloff, pushing yields on 10-year bonds back to 5%, according to Vanguard.

On Friday, explosions were heard over the Iranian city of Isfahan in what sources said was an Israeli attack but Tehran played down the incident and said it had no plans for retaliation.

Bullion rose to an all-time high above $2400 earlier this month. China, the world’s biggest producer and consumer of the precious metal, is front and center of the extraordinary ascent.

Money has flowed into gold ETFs in mainland China during almost every month since June, according to Bloomberg Intelligence. Moreover, the PBOC has been on a buying spree for 17 straight months.

Chile imposed temporary tariffs on Chinese steel products used in the country’s mining industry. Joe Biden was also calling for higher tariffs on those products last week, spurring the threat of more stubborn inflation.

The yellow metal popped back up above $2,300 shortly after the psychological mark was hit. As such we see strong support around that level and the next hurdle at 2,400.

EBC Wealth Management Expertise Disclaimer: This material is for general information purposes only and is not intended as (and should not be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation byEBC Wealth Management Expertise or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.

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