Gold prices rose on Wednesday as US Treasury yields fell, providing the precious metal some respite after a sharp drop due to traders' anticipation of the release of the July Federal Reserve meeting minutes.
Spot gold traded around $4,350 per ounce during Asian trading hours after falling nearly 2% on Tuesday. At the time of writing, it had risen to $4,361, according to Tradingview. The recovery came against a backdrop of a decline in the 10-year Treasury yield to 4.70% and a 30-year bond yield near a 19-year high.
The US Dollar Index retreated from recent highs, which was a favorable factor for gold, the price of which is tied to the US currency. A weaker dollar makes gold cheaper for holders of other currencies and often leads to increased demand.
Investors are now awaiting the release of the minutes from the US Federal Reserve meeting held on July 28-29. At that time, the financial regulator kept the rate in the 3.50-3.75% range, with three committee members voting for an increase. Therefore, market participants are now looking for signals about the level of support for a more hawkish policy.
According to the latest CME FedWatch quotes, the probability of rates remaining unchanged is approximately two-thirds. While gold is still trading significantly below its January high, it has risen considerably in August as weak US economic data and interest rate expectations have prompted investors to return to the precious metal.
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