Gold Rises as USD Slides, Treasury Auction Yield Spikes
Gold prices rose early on Wednesday as safe-haven buying returned on scepticism over Russian promises during peace talks to reduce military activity around the Ukrainian cities of Kyiv and Chernihiv and the US dollar weakened.
In the commodity market, data shows that Gold for June delivery was last seen up US$13.60 to US$1,931.50 per ounce, after briefly falling below the US$1,900 mark on Tuesday. Demand for gold had spiked following Russia’s invasion and weak financial markets performance.
Today’s price jump came as Russia failed to carry through on promises made by deputy defense minister Alexander Fomin at peace talks in Turkey to “drastically reduce” military activity around the two cities as attacks on both continued.
“Many Western governments are sceptical about Russia following its words with actions and actually implementing the partial withdrawal. The Ukrainian leadership believes Russia’s announcement is just a ploy.
Markets appear to share the West’s view,” Commerzbank analyst Daniel Briesemann said in a note. The US dollar weakened, making gold more affordable for international buyers. The ICE dollar index was last seen down 0.39 points to 98.02.
Bond yields edged higher, bearish for gold since it offers no interest. The yield on the US 10-year note was last seen up 1.1 basis points to 2.412%. The US Treasury’s 7-year auction hit a high yield of 2.499%, up from the 1.769% high in the previous auction.
The bid to cover ratio for the auction was 2.44, above the 2.36 ratio in the previous auction. Dealers represented 53.47% of the bids, with direct bidders at 16.12% and indirect bidders at 30.4%. READ: Gold Falls as Hawkish Fed Minutes Boost Bond Yields
For takedown, dealers took 10.52%, with direct bidders at 28.55% and indirects were awarded 60.93%. #Gold Rises as USD Slides, Treasury Auction Yield Spikes
