“We are seeing investment flows into gold as market participants grow more anxious about rising real rates that can impact equity valuations,” TD Securities commodity strategist Daniel Ghali told Reuters.
On Monday, US benchmark 10-year treasury yields jumped to their highest in about a year, increasing the opportunity cost of holding non-yielding bullion.
However, rising real yields and inflation concerns have made equity valuations look more stretched in comparison and prompted investors towards safe haven assets like gold, which is widely viewed as a hedge against inflation.
“The dollar at the moment is low and that is supporting. Also, the real reason for the gold prices to increase in the longer term is the chances of inflation picking up,” Commerzbank analyst Eugen Weinberg said.
Gold’s sister metal silver also surged 2.4% to $27.94 per ounce, having soared to an eight-year high earlier this month.
(With files from Reuters)
