Gold Finds Support After Highest US Bond Yield Since 2002

Gold found a support level after a week of sharp volatility, as the yield on 10-year US Treasury bonds touched 5.36% on Wednesday, reaching its highest level since April 2002, pushing the yellow metal below $4,100 for the first time in two months, before the yield pulled back and gold rebounded toward $4,200 on Friday.

Weekly technical analysis identifies a resistance level at $4,260 to $4,300 per ounce, while support is centered at $4,100, followed by the range of $4,000 to $3,970. Breaking resistance indicates potential for further upside, while breaking the first support retests the lower bottom.

The analysis indicates that TD Securities sees a possibility of gold gradually decoupling from its historical relationship with real rates, initiating a new upward wave extending until 2027, driven by central bank purchases and concerns regarding inflation and monetary policies.

Yields remain historically high, posing a pressing factor for gold as it yields no interest, but the metal's swift rebound after hitting lows indicates strong buying demand at lower levels. Bond yield movements and US inflation data remain the two decisive factors for the coming week.

What Do These Terms Mean?

Treasury Bond Yield: The interest earned by the holder of a government bond; higher yields make investing in bonds more attractive compared to gold.

Real Interest Rates: The interest rate after deducting inflation, an important measure of the cost of holding gold because its rise increases bond competitiveness.

Support and Resistance Level: Support is a price at which a decline stops due to a high number of buyers, and resistance is a price at which an increase stops due to a high number of sellers.