- Spot gold continues to nudge higher as real yields fall and is now above $1820.
- The precious metal is being supported by lower real yields and a weaker US dollar on Monday.
- Remarks from influential Fed member Clarida may have triggered a dovish market reaction.
Spot gold (XAU/USD) continues to trade with an upside bias on Monday after breaking above key resistance last Friday in the $1814/oz area. Spot prices surpassed $1820 earlier in the session, the highest level in over two months. Gold bulls will now be eyeing a move back to test resistance in the $1830s, an area that spot prices tried and failed to break above on between July and early September. To the downside, there is support in the form of the October highs around $1810.
Falling Real Yields
US real yields, which saw a sharp fall last week, continue to head lower on Monday, with the 10-year TIPS yields down roughly 2bps on the session and back below -1.10%. Gold has a negative correlation to real yields; as real yields decline, this reduces the opportunity cost for investors in holding non-yielding precious metals, thus boosting their appeal. The fact that US inflation expectations are moving higher may also be helping gold given its reputation as an inflation hedge. 10-year break-evens are up about 6bps to 2.58% on Monday and showing signs that a move back towards recent multi-decade highs close to 2.7% could be on the table.
Weaker Dollar
A weakening US dollar is also giving dollar-denomination spot gold a helping hand on Monday. The Dollar Index has weakened by about 0.3% on the session and has fallen back to test the 94.00 level. A weaker USD makes spot gold cheaper for global buyers, thus increasing its demand.
Influential Fed member and Vice Chairman of the FOMC Richard Clarida spoke earlier in the session and his comments were more dovish than many might have expected; he said the conditions for a rate hike could be met by the end of 2022 and the Fed is still some way from considering rate lift-off. USD STIR markets currently price a hike by September 2022, thus Clarida’s remarks may be interpreted by some as dovish pushback against the market’s pricing. This may have contributed to USD underperformance on Monday and may, thus, be helping gold.
Note: All information on this page is subject to change. The use of this website constitutes acceptance of our user agreement. Please read our privacy policy and legal disclaimer. Opinions expressed at FXstreet.com are those of the individual authors and do not necessarily represent the opinion of FXstreet.com or its management. Risk Disclosure: Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to invest in foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading, and seek advice from an independent financial advisor if you have any doubts.
Recommended content
Editors’ Picks
![EUR/USD stays below 1.1100, looks to post weekly losses](https://editorial.fxstreet.com/images/Markets/Currencies/Majors/EURUSD/european-euro-coin-on-top-of-american-dollar-bill-11292130_XtraSmall.jpg)
EUR/USD stays below 1.1100, looks to post weekly losses
EUR/USD continues to trade in a narrow range below 1.1100 and remains on track to end the week in negative territory. Earlier in the day, monthly PCE inflation data from the US came in line with the market expectation, failing to trigger a reaction.
![GBP/USD struggles to find a foothold, trades near 1.3150](https://editorial.fxstreet.com/images/Markets/Currencies/Majors/GBPUSD/iStock-157771037_XtraSmall.jpg)
GBP/USD struggles to find a foothold, trades near 1.3150
GBP/USD stays on the back foot and trades in negative territory at around 1.3150 on Friday. The US Dollar holds its ground following the July PCE inflation data and doesn't allow the pair to stage a rebound heading into the weekend.
![Gold retreats toward $2,500 ahead of the weekend](https://editorial.fxstreet.com/images/Markets/Commodities/Metals/Gold/gold-bars-50657756_XtraSmall.jpg)
Gold retreats toward $2,500 ahead of the weekend
Gold stays under modest bearish pressure and declines toward $2,500 in the American session on Friday. The 10-year US Treasury bond yield edges higher toward 3.9% after US PCE inflation data, causing XAU/USD to stretch lower.
![Week ahead – Investors brace for NFP amid Fed rate cut speculation](https://editorial.fxstreet.com/images/Macroeconomics/EconomicIndicator/Employment/NFP/america-back-to-work-gm178972493-25143312_XtraSmall.jpg)
Week ahead – Investors brace for NFP amid Fed rate cut speculation
Here comes another NFP week, with investors eagerly awaiting the results as they try to discern the size and pace of the Fed’s forthcoming rate cuts. The weaker than expected July numbers triggered market turbulence, instilling fears about a potential recession in the US.
![Easing Eurozone inflation to back an ECB rate cut in September](https://editorial.fxstreet.com/images/Macroeconomics/Countries/Europe/Eurozone_countries/Eurozone/eu-flags-flying-at-the-european-commission-building-brussels-belgium-24759579_XtraSmall.jpg)
Easing Eurozone inflation to back an ECB rate cut in September Premium
Eurostat will publish the preliminary estimate of the August Eurozone Harmonized Index of Consumer Prices on Friday, and the anticipated outcome will back up the case for another European Central Bank interest rate cut when policymakers meet in September.
![Moneta Markets review 2024: All you need to know](https://editorial.fxstreet.com/images/IT/Testing/Review/FXSBadgeCertifiedBackg_XtraSmall.png)
Moneta Markets review 2024: All you need to know
VERIFIED In this review, the FXStreet team provides an independent and thorough analysis based on direct testing and real experiences with Moneta Markets – an excellent broker for novice to intermediate forex traders who want to broaden their knowledge base.