Gold Prices Dip Amid Rising US Treasury Yields and Continued Central Bank Hoarding

Gold prices drifted lower during the Asian session on Friday, partially erasing the previous day's strong move, which was inspired by softer US CPI data that had driven prices up to the $2,424-2,425 region. A modest increase in US Treasury bond yields bolstered the US Dollar, attracting some buyers. This, combined with a positive risk tone, undermined the yellow metal.

Gold traded up almost half a percent in the $2,380s on Thursday as markets anticipated future interest-rate cuts. During his second day of testimony to US lawmakers, Federal Reserve Chairman Jerome Powell balanced cautious optimism about inflation coming down without significant job losses—a "soft-landing"—while maintaining a vigilant, data-dependent approach to inflation. His comments supported gold, which tends to perform better when interest rates are expected to fall due to the reduced opportunity cost of holding the asset. Additionally, gold is benefiting from data showing continued hoarding by central banks worldwide, despite the People’s Bank of China halting its gold purchases for the second consecutive month in June after an 18-month buying spree.