Gold Refuses To Crack: Bulls Dig In As Yields And Dollar Test Their Limits

Gold prices hovered near a one-week high early Friday, stabilizing around $2,360 an ounce as Treasury yields eased and the dollar consolidated after a strong run. The modest rebound follows a volatile two-week stretch that saw the metal swing between $2,320 and $2,385, driven by shifting expectations over U.S. interest-rate policy and the global appetite for risk.

Analysts say the latest price action reflects a tug-of-war between competing forces: firm real yields, which typically weigh on gold, and a resurgence in demand for portfolio hedges amid geopolitical and currency uncertainty. The 10-year U.S. Treasury yield, which peaked near 4.70 % earlier this week, has retreated slightly to 4.64 %, easing pressure on non-yielding assets like bullion. Meanwhile, the U.S. Dollar Index remains near 105.8, limiting upside momentum but keeping gold supported as central banks continue to diversify reserves.

Physical demand in Asia remains steady. Data from the Shanghai Gold Exchange show daily turnover rising 5 % week-over-week as Chinese retail investors bought into recent dips, while Indian jewelers have reported brisk pre-festival demand despite high rupee-denominated prices. Exchange-traded funds tell a more cautious story: global gold ETFs recorded net outflows of roughly 3.1 tons last week, the smallest withdrawal in a month, suggesting that institutional selling pressure is easing.

For investors, gold's mixed performance underscores its evolving role in the current market environment. With headline inflation moderating but real yields elevated, bullion is functioning less as a traditional inflation hedge and more as a stability trade — a way to preserve capital amid volatility in equities and currencies. Analysts note that the correlation between gold and the S&P 500 has turned slightly negative again after trending positive through much of October, a sign that diversification benefits are returning.

In technical terms, support for spot gold lies near $2,330, with resistance at $2,385. A sustained move above that upper band could trigger algorithmic buying toward $2,420, while a break below support may invite profit-taking back to $2,300.

Market strategists expect price volatility to stay contained unless upcoming U.S. inflation data surprise significantly.

For long-term holders, the broader backdrop remains constructive. Central-bank purchases are still running above historical averages — roughly 35 tons per month globally — and the ongoing dollar strength has not yet sparked meaningful liquidation among Asian buyers. If U.S. yields gradually drift lower into year-end, analysts see potential for gold to retest the $2,400 threshold before 2026.

Originally published on IBTimes