Gold subdued as yields rise

Gold prices eased on Monday as U.S. 10-year Treasury yields advanced higher, while investors kept a tab on growing unrest in the Middle East and awaited U.S. economic data.

Spot gold was down 0.2% at $1,976.29 per ounce by 9:31 a.m. ET (1331 GMT). U.S. gold futures eased 0.3% to $1,987.90.

The yield on the benchmark 10-year U.S. Treasury note hit 5.0%, decreasing the appeal of non-yielding bullion.

“Higher yields continue to be a drag on gold prices, but we believe geopolitical tensions and the uncertainty in the Middle East will continue to drive prices higher,” said David Meger, director of metals trading at High Ridge Futures.

Bullion prices hit their highest since mid-May on Friday and surged about 9% in the past two weeks as investors fluttered into the safety of gold on fears that the Israel-Hamas war could escalate into a wider Middle East conflict.

Focus is also on the U.S. PCE price index — the Federal Reserve’s favoured inflation gauge — U.S. GDP figures for the third quarter, the European Central Bank’s rate decision and global flash PMIs for economic cues.

“If inflation data come in higher than expected, it will raise concerns about rising interest rates, to which gold might see a knee-jerk reaction to the downside, but safe-haven demand should begin to kick post that,” Meger added.

Mirroring investor sentiment, holdings of SPDR Gold Trust , the world’s largest gold-backed exchange-traded fund (ETF), rose 1.77% to 863.24 tonnes on Friday.

Elsewhere, spot silver slipped 1% to $23.11 per ounce, platinum fell 0.3% to $892.54 and palladium gained 1.6% to $1,115.05.

“Sluggish BEV (battery-powered electric vehicle) sales growth and an increase in palladium-containing light vehicles this year is expected to contribute to a slight improvement in Chinese palladium autocatalyst demand this year,” Heraeus analysts wrote in a note.