Where we are: Gold (COMEX) currently trades at 4740.9, up 0.54% and near the high of the day’s range (4672.2-4757.1). Bullion is catching a bid in early trading after finding support late in the EU session. Gold is building on gains from Friday after bouncing near 4650. The move is supported by a weaker dollar as risk sentiment improves.
What’s driving it: The primary driver for gold is dollar weakness, with the DXY currently at 98.36, down 0.31%. This is providing a tailwind for gold, as is the slight pullback in US Treasury yields. While the 10-year yield is only down marginally at 4.302%, the more significant move is in the 2-year yield, which has dropped 5.9 bps to 3.785%. The slight inversion steepening should be a boon for Gold. News of Aurelion allocating $48 Million in Tether Gold to XAUE yield protocol will provide a lift to the market, as well.
- Yahoo Finance: Aurelion Allocates $48 Million in Tether Gold to XAUE Yield Protocol
- US 2Y Yield dropped 5.9bps to 3.785%
- CFTC data shows net non-commercial positions are modestly long at +164,006 contracts, in the 25th percentile over the past year.
NY session focus: The key event to watch will be President Trump’s speech at 17:00 London time, though the market is unlikely to take much notice. Traders should monitor the dollar index and Treasury yields for further direction. A break above the intraday high of 4757.1 could see gold test 4775. On the downside, support lies around 4720, followed by 4700. Given the relatively light positioning, a short squeeze is unlikely, but the real pain trade for gold would be a hawkish Trump comment that sends yields and the dollar higher.