Where we are: Gold is trading down 0.53% on the session at $4223.3, struggling to find footing as US real yields continue their ascent. The metal has shed some of its recent gains, trading below its prior New York close and testing intraday lows as the New York session opens. We’re watching the $4200 psychological level closely.
What’s driving it: The primary headwind for gold remains the relentless grind higher in US 10-year real yields, which have climbed 9.0 basis points to 2.23% as of yesterday’s close. This is a direct drag on non-yielding assets. While breakeven inflation expectations have edged lower, the real yield component is the dominant force here. Geopolitical headlines suggesting a potential roadmap toward a US-Iran peace deal are easing some of the safe-haven bid, though this remains a fluid situation.
- US 10Y Real Yields (TIPS) at 2.23% (+9.0bp d/d) are acting as a firm headwind.
- Breakeven inflation expectations are stable at 2.25% (-1.0bp d/d).
- Speculative net non-commercial positioning in gold remains modestly long at +173,837 contracts, but this is only at the 33rd percentile over 52 weeks, suggesting limited squeeze potential from this side.
NY session focus: With no high-impact US data prints scheduled before the New York open, the focus will be on the continuation of the real yield trend and any further developments on the geopolitical front. We’re watching US 10Y yields for any signs of capitulation above 4.50%, which would add further pressure on gold. The trade that’s working is short gold against rising real yields. The trade at risk is any sudden de-escalation or unexpected inflation print that could send real yields tumbling. The pain trade for this asset is a sustained move higher in real yields, pushing gold back towards its year-to-date lows.