GOLD PRICES rallied back above $2000 per ounce Thursday as worse-than-expected US jobless data saw the Dollar slip with both global stock markets and longer-term interest rates.

 

Benchmark yields on 10-year US Treasury bonds had earlier popped to 1-month highs above 3.64% per annum before dropping back 10 basis points after the Department of Labor said initial claims for jobless benefits rose last week back to mid-March's 14-month highs, while continuing claims rose to the highest since November 2021.

 

The yield on 10-year Treasury Inflation Protected Securities – the benchmark for so-called 'real rates' – had also risen earlier back towards 4-week highs near 1.30% per annum, the most strongly positive real rate in more than a decade when reached last September.

 

Gold prices then traded below $1650 per ounce having traded beneath $1380 at the previous touch in February 2011. 

 

Rising real rates acted as 'kryptonite' to gold prices last fall and again in February, when the negative correlation between 10-year TIPS yields and gold prices reached its most extreme in a decade.

 

 

"The [short term] correlation between gold and real 10-year yields remains reasonably strongly negative," says John Reade, strategist at the mining industry's World Gold Council, "and well within the range seen over the past 6 years."

 

Put another way, "the relationship between gold and US real yields isn't [yet] broken."

 

With the US central bank currently targeting overnight interest rates around 4.83% per annum, betting that the Fed will raise its target by another 25 basis points at next month's meeting now outweighs bets backing 'no change' by 6-to-1, according to data from the CME derivatives exchange's FedWatch tool, up from 2-to-1 this time last week and below 1-to-1 at this point in March, when the mini-crisis in US banking saw Swiss giant Credit Suisse forced into a takeover by rivals UBS.

 

Betting on New Year 2024 meantime puts the consensus forecast at 4.66%, sharply above the 4.00% forecast for end-December shown by the FedWatch tool this time last month.

 

With UBS that day taking over Credit Suisse, gold prices popped above $2000 for the first time since the financial-markets' shock at Russia invading Ukraine 12 months earlier.

 

Sanctions against Russia over its invasion of Ukraine may now move to "a near-total embargo on exports" by the US and its economic allies in the G7 group of nations, Bloomberg reports.

 

As gold prices reached $2010 on Thursday afternoon in London, silver also regained last weekend's closing level, trading back at $25.35 per ounce.

 

Palladium meantime rose back towards Tuesday's sudden 10-week highs at $1620 and the price of platinum extended its run to fresh 15-month highs, rising within 20 cents of $1100 per ounce.

 

Mining some 75% of new platinum supply and 40% of palladium each year, South Africa today saw government-owned energy monopoly Eskom confirm that "load shedding" power cuts will continue "indefinitely" ahead of the winter.