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Gold Prices Hold Steady as U.S. Yield Curves Invert Further

Investing.com - Gold prices traded slightly higher on Wednesday as the yield on 30-year U.S. Treasuries hit a record low and a closely watched yield curve inverted even further, increasing fears of a potential recession.

Gold futures for December delivery on the Comex division of the New York Mercantile Exchange, edged forward $1.25, or 0.1%, to $1,553.05 a troy ounce by 8:37 AM ET (12:37 GMT).

The yield on the 30-year U.S. Treasury hit a record low falling below that of 3-month paper for the first time since 2007.

The more closely-followed premium on the 2-year over the 10-year reached 6 basis points, a spread also not seen since 2007.

The two-year/10-year inversion is often considered a negative sign for the economy as every recession in the last 50 years has been preceded by it. The timing is quite varied however with Credit Suisse indicating that the inversion occurs, on average, 22 months ahead of the actual recession. Also, not every inversion has been automatically been followed by a recession.

Falling yields make non-yielding gold more attractive by comparison. The World Gold Council notes that about $16 trillion of global debt is trading with nominal negative yields. According to the WGC, 70% of all developed market debt is trading with a negative real yield and the remaining 30% has a real yield close to or below 1%.

Among the yields falling fastest on Wednesday were those on U.K. government debt, after Prime Minister Boris Johnson announced plans that have the effect of restricting his opponents' ability to stop him pushing through Brexit by Oct. 31. Analysts said the plans made a disorderly "Hard Brexit" more likely.

In a session with no major U.S. economic reports, investors will be watching later for remarks from Federal Reserve policymakers amid expectations that the U.S. central bank will further cut rates in September. Richmond Fed President Thomas Barkin will speak at 12:20 PM ET (16:20 GMT); while San Francisco Fed chief Mary Daly will speak at 5:30 PM ET (21:30 GMT).

In other metals trading, silver futures gained 1.2% to $18.512 a troy ounce by 8:40 AM ET (12:40 GMT).

Palladium futures fell 1.0% to $1,465.90 an ounce, while sister metal platinum rose 1.4% to $880.30.

In base metals, copper dipped 0.1% $2.551 a pound.

-- Reuters contributed to this report.

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