Gold Prices Climb From 1-Week Lows in Risk-Off Trade

Investing.com – Gold prices moved higher on Tuesday, pulling away from one-week lows as rising U.S. bond yields and concerns over the outlook for global growth soured market sentiment.

December were up $3.20 or 0.27% to $1,191.8 by 10:30 AM ET (14:31 GMT) on the Comex division of the New York Mercantile Exchange. Prices settled at $1,184.40 on Monday, the lowest close since Sept. 28.

Gold’s gains came as from the move higher in U.S. Treasury yields, which sent the yield on to a fresh seven-year peak earlier Tuesday.

The sell-off in Treasuries has been spurred by expectations for a potentially faster pace of rate hikes from the Federal Reserve.

Expectations for rising interest rates look likely to remain a headwind for gold prices. Interest rate increases and higher U.S. bond yields dampen appeal for gold, which offers no yield. They also tend to boost the dollar.

Risk aversion also mounted after the International Monetary Fund on Tuesday, warning that trade conflicts are starting to have a serious impact on the global economy.

The IMF downgraded its outlook for the U.S., China, the euro zone and the UK, saying it now expects the global economy to expand by just 3.7% in 2018 and 2019, down from 3.9% before.

Gold’s gains came in spite of its typically inverse relationship to the U.S. dollar.

The , which measures the greenback’s strength against a basket of six major currencies, was last at 95.50, not far from the six-week high of 95.78 reached late last week.

A stronger dollar makes dollar denominated assets, like gold, more expensive to potential buyers holding other currencies.

Elsewhere in metals trading, December advanced 0.55% to $14.40 a troy ounce, while January was trading at $826.00, up 0.95% for the day.

Among base metals, December added on 0.8% to trade at $2.788.

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