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Gold futures rallied Wednesday as Treasury yields fell following weaker than expected U.S. private payrolls data that added to renewed hopes for a September interest rate cut from the Federal Reserve.
The yield on the two-year Treasury fell 4 bps to 4.73%, shedding 25 bps over the past five sessions for its longest stretch of declines in four years, while the 10- and 30-year rates finished at their lowest levels since March 28, 4.29% and 4.44% respectively, after also falling for five straight trading days.
According to the CME FedWatch Tool, traders now see a ~67% chance of a Fed rate cut by September, compared with less than 50% last week.
Analysts say other key U.S. economic reports, including the non-farm payrolls report scheduled for Friday, have the potential to influence gold prices.
“ETFs are now likely the primary catalyst for bullish gold momentum going forward, with a further slide in [U.S.] government yields expected to push safe-haven investors into bullion,” SP Angel analysts say, according to Dow Jones.
Front-month Comex gold (XAUUSD:CUR) for June delivery ended +1.2% to $2,354.10/oz, and front-month June silver finished +1.5% to $29.948/oz.
ETFs: (NYSEARCA:GLD), (NYSEARCA:GDX), (GDXJ), (IAU), (NUGT), (PHYS), (GLDM), (AAAU), (SGOL), (BAR), (OUNZ), (SLV), (PSLV), (SIVR), (SIL), (SILJ)
Net purchases of gold by global central banks jumped to 33 metric tons in April from a revised net buying of 3 tons in March, the World Gold Council said, signaling continued strong appeal despite high prices.
U.S. rate cuts likely will win back Western gold investors, World Gold Council chief market strategist John Reade said this week at the Nomura Investment Forum Asia.
Elevated interest rates have hurt European and U.S. investor interest in gold, although prices held up well, helped by central bank purchases, mostly from emerging markets, Reade said.
