Gold Extends Its Rally as Treasury Yields Continue to Retreat

Gold climbed higher, helped by a continued decline in Treasury yields, as traders weighed concerns that central banks’ monetary tightening will lead to recession and the possibility that bond rates may have reached a peak.

Bullion extended its first weekly gain in three, as lower bond rates boosted the appeal of the non-interest bearing asset. Investors remained jittery about the impact of aggressive interest-rate hikes after a slew of Federal Reserve officials last week re-emphasized their resolve to fight inflation.

Traders will now look to US jobs data due on Friday for more clues on the future path of central bank monetary policy. That means bullion could be in for more volatility, with strong numbers potentially spurring further gains in bond yields that would be harmful for gold.

“Gold prices remain in a strengthening downtrend,” said TD Securities commodity strategists led by Bart Melek. “The risk of capitulation remains prevalent for the yellow metal moving into October, with strong data continuing to point to a more aggressive Fed rate path ahead.”