Metal Prices Inch Higher; Gold Sidesteps Rising Bond Yields

Investing.com – Gold prices rose Wednesday as a subdued dollar and lingering trade concerns lifted demand for the yellow metal, despite a jump in bond yields ahead of a widely expected Federal Reserve rate hike.

for December delivery on the Comex division of the New York Mercantile Exchange rose by $5.00, or 0.42%, to $1,207.90 troy ounce.

With a Fed rate hike on Sept. 26 already priced into the market, investors have seemingly strengthened bets for another hike in December, pushing higher, keeping a lid on gains in the yellow metal.

The odds of a September Fed rate hike stood at 100%, but for December increased to a , as a strong job market and firmer inflation has strengthened the Fed’s case to continue on its path of gradual rate hikes.

In a rising interest rate environment, investor appetite for gold weakens as the opportunity cost of holding the precious metal increases relative to other interest-bearing assets such as bonds.

Yet dollar weakness and signs of steadying emerging markets underpinned gains in metals, including gold prices.

The , which measures the greenback against a trade-weighted basket of six major currencies, fell by 0.10% to 94.13.

Dollar-denominated assets such as gold are sensitive to moves in the dollar. A fall in the dollar makes gold cheaper for holders of foreign currency, increasing demand for the precious metal.

The rout in emerging markets, which had been holding back metal prices somewhat, eased amid signs that investor dollars are returning to developing economies.

JPMorgan’s EM Local Government Bond exchange-traded fund received $169 million on Tuesday, the highest inflow since June 2017.

Still, the wider metals markets continued to digest the potential fallout from tariffs (less harsh than expected) announced by the U.S. and China .

fell 0.13% to $2.73, rose 2.10% to 2,420.75 and rose 1.01% to 12,492.50.

fell 0.10% to 2,030.00.

rose 0.70% to $14.29 a troy ounce, while rose 0.87% to $822.00.

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