​Gold rallies to three-month high despite soaring yields


Gold reached a 3-month high amid Middle East tension, while the Fed Chair voiced concerns over high inflation. Gains continue for a 2nd week.

Gold prices hit a three-month peak on Friday and were set for a second straight weekly gain due to the Middle East conflict though the Fed Chair said inflation is ‘still too high.’

Israeli Prime Minister Netanyahu warned that the conflict with Hamas will not be a short-term engagement. The US and the UK has voiced resolute support for Israel’s operation.

Powell in his speech did not indicate he leaned towards more rate hikes. Futures market traders erased any possibility of a rate hike in November and decreased the chances of a move even in December.

The number of Americans filing new claims for unemployment benefits unexpectedly fell last week, indicating that strong job growth persisted in October.

The benchmark 10-year Treasury yields crossed 5% for the first time since July 2007. A New York Fed calculation shows that the term premium is around its highest level since May 2021.

Chinese investors offloaded the most US bonds and stocks in four years in August. A Bloomberg index of Treasuries is heading for a sixth straight month of losses.


Gold has formed a golden cross pattern on the daily chart – a bullish sign for uptrend to continue. It now trades around the significant $1980 level. A reclaim of $2000 still seems unlikely given high rates.

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 by EBC or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.

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