Where we are: Gold (COMEX) currently trades at 4739.5, up 0.85% on the session, having traded in a range of 4690.7-4743.5. Bullion is bid firmly above the psychological 4700 level and is testing the upper end of its recent range, supported by the ongoing decline in real yields. Intraday momentum has accelerated in the last hour, building on gains seen during the Asian session.
What’s driving it: The primary driver for gold remains the continued decline in US real yields. The 10-year TIPS yield fell 2.0bp to 1.94% earlier this week, providing a tailwind for the precious metal. The 10-year breakeven inflation rate is also contributing, rising 3.0bp to 2.45%. The Fed’s Cook speaking on tokenization may be a distraction from the core macro drivers, as traders focus more on the yield curve and inflation expectations, alongside a slightly weaker dollar tone.
- US 10Y Real Yields are down 2.0bp, underpinning the bullish move in gold.
- DXY has softened to 97.77, offering further support to the commodity.
- CFTC data indicates that non-commercial positions in gold are moderately long, leaving room for further upside before squeeze risk becomes acute.
NY session focus: The key focus for the NY session will be the 08:30 ET US jobs report, with Average Hourly Earnings, Non-Farm Employment Change, and the Unemployment Rate all in play. A weaker-than-expected print could further pressure real yields and lift gold towards 4750. A strong print risks a reversal, with initial support around 4700. Expect choppy trading around the 10:00 ET Prelim UoM Consumer Sentiment release. The pain trade for gold is a hawkish surprise in the jobs numbers, triggering a sharp rise in yields and a dollar bid.