Gold futures, 2-hour chart
Both greenback and bonds yields have been slightly retreating across the board from their two-decade highs hit this week, triggering a relief mini-rally in the dollar-denominated Gold and Silver since they are becoming less expensive for buyers with other currencies.
Even though both metals are heading for their biggest weekly gains since August, the aggressive monetary policy tightening by Federal Reserve and the growing fears over slowing global economic growth is giving support to the dollar and bond yields, adding a cap on the gains and the upward price momentum on the precious metals.
The DXY-dollar index fell to near a one-week low of 111,60 touched on Friday morning on some profit-taking trades, after climbing to a 20-year high of 114,70 mark in the previews day, as the Federal Reserve maintains an aggressive policy stance to tackle soaring inflation.
The yield on the benchmark 10-year U.S. Treasury was down to 3.68% this morning, retreating from a 14-year high of 4% hit on Wednesday, while the policy-sensitive 2-year Treasury also fell to near 4.15%, well below the 4,35% record highs.
Though gold is seen as a hedge against soaring inflation, economic uncertainties, and geopolitical risks, a series of aggressive U.S. rate hikes this year have dented the non-yielding bullion’s appeal and lifted the dollar to a two-decade peak.
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