Gold Extends Gain Above $1,800 After Treasury Yields Decline

(Bloomberg) -- Gold gained for a seventh day as U.S. bond yields continued to sink and investors mulled Federal Reserve minutes that showed policy makers wanted a more solid economic recovery before setting a timeline for tapering.

Rates on 10-year Treasuries fell to their lowest since February as stocks and equity futures retreated amid growing anxiety that the spread of Covid-19 variants will upend growth expectations. The move boosted bullion, which bears no interest.

Notes from the Fed’s June meeting indicated officials weren’t ready to schedule the withdrawal of the bank’s massive bond-buying program, given uncertainties around the economic outlook. But they also acknowledged the need to plan for tapering, and reiterated the possibility for stimulus to be pared back sooner than anticipated.

“Looking at the market reaction, there is some concern that rate hikes will have a negative impact on growth,” said Giovanni Staunovo, a commodity analyst at UBS Group AG. “Inflation expectations are falling but nominal rates are also falling even more, pushing down real rates and supporting gold.”

Bullion has rebounded in July after its biggest monthly decline in more than four years amid concerns about a more hawkish Fed pivot. Gold is still down more than 4% this year as investors bet that vaccines will eventually spell an end to pandemic-era stimulus measures.

Spot gold climbed 0.6% at $1,814.98 an ounce at 1:57 p.m. London time. Silver was steady, while platinum and palladium fell. The Bloomberg Dollar Spot Index declined 0.1%.

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