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Gold: Higher yields cap bullion despite risk-on – Deutsche Bank
Key Takeaways (30s Read)
Gold is capped by rising yields, despite improved risk sentiment across equities.
According to Deutsche Bank's early morning report, while risk sentiment has improved across equities and credit, gold is being capped by high U.S. Treasury yields. Specifically, the 10-year Treasury yield has risen to 4.05%, as the market prices out the potential for Fed rate cuts in the first half of 2023. This trend is likely to affect investor's preference for gold, diverting interest toward other asset classes. Despite a risk-on environment, gold is expected to remain under pressure from rising yields.
AI Analyst
AI Opinion
"Despite the overall improvement in market risk sentiment, gold remains constrained by rising yields. The increase in the 10-year Treasury yield diminishes the appeal of gold, as it reduces expectations for Fed rate cuts. Although gold continues to play its role as an inflation hedge and a safe-haven asset, the shift towards riskier assets may prevail in the current environment. Therefore, in the near term, gold is likely to maintain a challenging stance, with bearish positions being potentially favored."
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