Gold prices gained on Tuesday as a recent rally in the U.S. dollar and Treasury yields showed signs of fatigue ahead of crucial inflation and jobs data this week that could define the outlook for interest rates.
Gold prices are seeing short-covering by speculators as a minor key resistance at $1,907 that coincided with the 200-day moving average has been surpassed, said Kelvin Wong, a senior market analyst, Asia Pacific, OANDA.
Helping gold further, the dollar dipped against a basket of major currencies, while benchmark U.S. 10-year Treasury yields moved further away from their highest levels since 2007 hit last week.
A weaker dollar tends to make gold, which yields no interest, less expensive for other currency holders.
With elevated rates, consumer spending is likely to slow and a recession becomes almost inevitable, which would result in falling bond yields and a weaker dollar, and gold prices could rebound, Heraeus analysts wrote in a note.
Persons:
Kelvin Wong, Jerome Powell's, Wong
Organizations:
Heraeus, Solar, U.S ., Treasury, Federal, Trust, Palladium
Locations:
Budapest, Hungary, ., Asia Pacific