Safe Haven Gold Underpinned by Stronger Dollar, Bond Yields

Gold (XAU/USD) is starting Monday by trading mostly unchanged, underpinned by rising strength in the US dollar. At the time of writing, gold

Skerdian Meta•Monday, July 11, 2022•1 min read

Safe Haven Gold Underpinned by Stronger Dollar, Bond Yields

Gold (XAU/USD) is starting Monday by trading mostly unchanged, underpinned by rising strength in the US dollar. At the time of writing, XAU/USD is trading at a little above $1,741, close to the lowest levels seen in nine months hit during the previous trading week.

On Friday, the greenback continued its ascent, making its way to a near two decade high. The rising value of the US dollar is making gold more expensive for international buyers of the bullion and pressuring its safe haven appeal even in the face of strong uncertainties in the global financial markets.

In addition to gold, other safe haven instruments are also feeling the pressure of the stronger USD. Earlier in today’s Asian session, the Japanese yen fell to the lowest levels seen in 24 years against the dollar.

XAU/USD

The precious metal ended its fourth consecutive week in the red on Friday, making its way lower amid increased expectations among market participants for higher interest rates. Higher rates weaken the appeal of the safer bullion and this sentiment was boosted after the US economy posted a robust employment report for June on Friday.

In addition, the benchmark 10-year US Treasury yields are also holding close to the highest levels seen in more than a week. Stronger bond yields also weaken the appeal of gold as an investment in the market, further weighing on XAU/USD prices.

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Skerdian Meta

Lead Analyst

Skerdian Meta Lead Analyst. Skerdian is a professional Forex trader and a market analyst. He has been actively engaged in market analysis for the past 11 years. Before becoming our head analyst, Skerdian served as a trader and market analyst in Saxo Bank's local branch, Aksioner. Skerdian specialized in experimenting with developing models and hands-on trading. Skerdian has a masters degree in finance and investment.