Gold rises on dollar weakness but US bond yield limits gains

Gold prices expanded their gains for the second day in a row on Wednesday, driven by a weaker dollar, although gains were limited by high yields on US Treasuries and the potential reduction in the purchase of Federal Reserve assets.

At 1105 GMT, spot gold was up 0.6% to $ 1,780.20 an ounce, after rising 1.2% the day before. Gold futures in the United States were up 0.5% at $ 1,780.

“Gold remains supported as there is inflationary pressure amid higher energy prices and weaker data from China and US factory output”, dijo Xiao Fu, del Bank of China International.

As he indicated, there is a demand for safe assets due to concerns about global growth, “but increases remain limited by the potential rise in bond yields and expectations of reduction (of stimuli).”

US factory output saw its biggest decline in seven months in September, in another sign that supply disruptions are hampering economic growth.

The attractiveness of gold improved for foreign buyers, as the dollar index was little changed and remained near the three-week low hit Tuesday. For its part, the yield on benchmark 10-year bonds reached its highest since May 20.

In other precious metals, spot platinum was down 0.1% at $ 1,039.49 an ounce; palladium was down 1% at $ 2,076.68 and silver was up 1.2% at $ 23.94.