Gold and silver futures were trading with minor gains in early Asian trade on Wednesday, continuing gains from Tuesday. A fall in crude oil prices and easing bets of an immediate interest rate hike by the US Federal Reserve supported prices. However, elevated US Treasury yields continued to weigh on market sentiment.
In the international market, COMEX gold futures hovered around $4,200 per ounce while silver futures $61.37 per ounce.
Oil prices ease
Brent crude oil prices fell 2.5% on Tuesday and were currently trading around $103.48 per barrel. The fall has relatively eased inflation concerns and supported bullion prices. However, crude oil prices still remain significantly higher than pre-West Asia war levels. The decline was on signs of recovering West Asia supply.
Fed rate hike bets
Meanwhile, market participants project a 47% probability of a 25 basis point rate hike by the US Federal Reserve in October, sharply lower than nearly 71% bets a day ago, according to the CME FedWatch tool.
Latest comments from the New York Federal Reserve President John Williams seem to have eased immediate rate hike fears. Williams said “there is no need for urgency, and we have time to gather more information” before the Fed’s October meeting, CNBC reported.
US bond yields
The surge in US treasury bond yields continued, with the benchmark 10-year treasury yield around 5.29%. The yield on the 30-year US Treasury rose 0.06 percentage points in New York on Tuesday to 5.62%, the highest level since June 2002.
Key US economic indicators in focus
Market participants will monitor key US economic data, with the core PCE price index and final GDP due later today, for further cues about the interest rate trajectory in the country. The US non-farm payrolls data, which is slated to be released on Friday, is another key data investors will watch.
“Gold remains vulnerable to further pressure if upcoming inflation and labour-market data point to persistent price pressures and increase the scope for monetary tightening,” Kaynat Chainwala, AVP Commodity Research at Kotak Securities had said in a note.
“A hotter-than-expected PCE reading, strong payrolls or a consistently hawkish Fed stance could keep yields and the dollar elevated, weighing on gold. Conversely, softer data or a more patient tone from the Fed could trigger a relief rally. For now, the market remains highly sensitive to the interaction between US data, Fed expectations, yields and geopolitical developments, making the next few sessions particularly important for determining whether gold can stabilise after the recent correction,” Chainwala added.