Where we are: Gold is trading near $4,700 an ounce as the New York session prepares to open, pressured by rising real yields. The precious metal failed to hold overnight gains following reports of increased Indian import tariffs. The move lower has broken intraday support at $4,710 and is now testing the $4,690 level. Prior NY close was near $4,720.
What’s driving it: Rising US real yields are the primary headwind for gold. The 10Y TIPS yield is currently at 1.95%, having risen 2bp since Monday. The unchanged 10Y breakeven inflation rate at 2.47% further underscores the pressure from real rates, as inflation expectations are not keeping pace. News that India has more than doubled tariffs on gold imports will curb physical demand and support the rupee.
- Reuters reported overnight that gold fell as hot US inflation data diminish rate cut bets.
- India hikes bullion import duties as the world’s second-largest gold market faces a declining rupee — CNBC.
- Speculative positioning remains modestly long, with net non-commercial positions at +163,303 contracts, at the 21st percentile.
NY session focus: All eyes will be on the 08:30 ET release of US PPI data. A higher-than-forecast print (0.5% headline, 0.3% core) will likely further boost real yields and exacerbate the downward pressure on gold. Focus will shift to the Fed Chair Nomination Vote at 14:30 ET. Key levels to watch are $4,680 (support) and $4,720 (resistance). The short gold/long real yields trade remains the favoured play. The pain trade would be a surprise dovish turn from the Fed causing real yields to plummet.