0008 GMT — Gold makes a subdued start in Asia as high bond yields offset pared-back rate-hike expectations. The 10-year Treasury yield touched another fresh high overnight, increasing the opportunity cost of holding non-interest-bearing metals. However, that relationship can change when the risks behind those yields become more important than the income they offer, says Giv Trade’s Hassan Fawaz.
Borrowing costs rising alongside worries about government finances and purchasing power can be a warning. If a cycle of higher refinancing costs and insufficient fiscal adjustment undermines investor confidence, gold could benefit as an asset that doesn’t depend on a government’s repayment promise. “The turning point comes when investors stop asking how much a bond pays and start asking why it needs to pay so much.” Spot gold slips 0.1% to $4,134.92 an ounce.
Source: Wall Street Journal Markets · Summarized by HeadlinesBriefing