Gold Steadies After Dropping From Record on High Treasury Yields

Gold steadied in Asian trading, after falling by the most in 11 weeks on Wednesday on higher US bond yields and profit-taking near record-high levels, Bloomberg reported.

Bullion traded near $2,720 an ounce after retreating from an all-time high on Wednesday to end the session down 1.2%. The pullback came as technical measures suggested a recent rally may have been too strong, with the 14-day relative strength index showing the metal was overbought.

Further bearishness came as US bonds extended losses on bets the Federal Reserve will take a measured approach to monetary easing. Rising yields and higher borrowing costs tend to weigh on gold, as the metal doesn’t pay interest.

Gold earlier on Wednesday hit a fresh record of $2,758.49, with a tight US presidential race and geopolitical risks in the Middle East boosting haven demand. There are concerns that the election in the world’s largest economy could be contested and it may take some time to determine the winner. Investors also feared that conflicts between Israel and Iran may escalate into a broader war.

The precious metal has surged by more than 30% this year, hitting successive highs, with the rally intensifying in the last couple of months as the Fed pivoted to cutting interest rates. Money managers have also added to the strength of the increase, with hedge funds boosting net-long positions in gold in recent sessions and investors adding to exchange-traded fund holdings.

Spot gold rose 0.1% to $2,719.27 an ounce at 8:49 a.m. in Singapore. The Bloomberg Dollar Spot Index was little changed. Silver, platinum and palladium advanced.