Gold eased in US hours on Thursday as US Treasury yields and the US Dollar steadied after Wednesday\u2019s pullback. XAU\/USD was around $4,457, down from an intraday peak of $4,527, its highest since June 2. The metal had risen more than 4% a day earlier after the US Treasury Department said it would step up liquidity-support buybacks in longer-dated government securities; the 30-year yield fell about 9 bps to 5.18% and the 10-year yield slipped roughly 5 bps to 4.63%. That followed a move above 5.30% in the 30-year earlier this week, a level last seen in 2007, though both the 10-year and 30-year yields were up around 6 bps on Thursday.<\/p>\n
The US Dollar Index, which tracks the Greenback against six major currencies, dipped below 99.00 on Wednesday to a three-month low, then traded near 98.80 after touching 98.56. Labour data also lent support, with Initial Jobless Claims at 206K versus expectations of 210K and a prior 212K reading revised from 209K. Markets also parsed Federal Reserve minutes, which referenced the 2% inflation target and suggested higher rates may be needed if disinflation stalls. Energy added to inflation anxiety: WTI was about $86.25 a barrel, up roughly 6% this week, as shipping through the Strait of Hormuz stayed heavily restricted. Technically, gold held above the 50-day and 100-day SMAs at $4,164 and $4,380, hovered near the 200-day SMA at $4,512, with RSI near 65 and a positive MACD histogram; levels cited included resistance at $4,650 and support down to $4,000.<\/p>\n
We suggest derivative traders prepare for increased volatility in gold as the metal struggles to hold above its 200-day Simple Moving Average of $4,512. Given the sudden pullback from the recent high of $4,527, we recommend using short-term bear put spreads to hedge against further downside toward the $4,380 support level. This strategy limits upfront premium costs while capitalizing on the immediate pressure from recovering bond yields.<\/p>\n
We are keeping a close eye on the bond market, where the 10-year Treasury yield has climbed back to around 4.69% on Thursday. Historically, operations like the Treasury’s buyback program\u2014which mirrors the liquidity-support measures reintroduced by the government in mid-2024\u2014only offer temporary relief to bond markets. Because these buybacks do not address massive government debt issuance or persistent inflation, we see value in shorting Treasury futures as yields are likely to head higher again.<\/p>\n
The stronger-than-expected labor data, with weekly initial jobless claims dropping to 206,000, proves that the American job market remains highly resilient. This strong economic data, combined with hawkish Federal Reserve minutes, should keep the U.S. Dollar Index supported after its bounce back to 98.80. We expect this environment to favor the dollar, making short-dated call options on the greenback an attractive play against major currencies.<\/p>\n
Geopolitical risks are also rising, with West Texas Intermediate crude climbing 6% this week to trade around $86.25 per barrel due to shipping restrictions in the Strait of Hormuz. We advise energy traders to buy long call options on oil to protect portfolios against sudden supply shocks in the Middle East. Any escalation in economic conflict could easily push oil prices past the $90 threshold in the coming weeks. <\/p>\n
From a technical perspective, we must monitor whether gold can achieve a daily close above $4,512 to sustain its bullish momentum. If the price fails to hold this level, a decline toward the 100-day Simple Moving Average at $4,380 is highly likely. We advise traders to keep their position sizes small and utilize tight stop-losses while the dollar and yields find their footing.<\/p>\n\n\n\n