Solid Gold Berjangka - Gold prices (XAU/USD) traded sideways around US$4,140 per troy ounce during Asian trading hours on Tuesday (October 20), following a slightly weaker opening. Over the past three weeks, gold has fluctuated within a range of US$4,063.55 to US$4,227.53, with gains capped by high oil prices and movements in U.S. Treasury yields.
Pressure on gold has intensified as U.S. Treasury yields show signs of recovery. The 10-year Treasury yield held steady around 5.15% following an increase on Monday. Higher yields tend to diminish the appeal of gold, as the precious metal—unlike bonds—does not generate a yield.
The market is also closely monitoring the third-quarter earnings season for major U.S. technology companies. Meta is set to be one of the first "hyperscalers" to report its quarterly performance, followed by Microsoft, Amazon, and Google. Goldman Sachs estimates that this group of AI-focused hyperscalers could increase their combined capital expenditure to approximately US$1.2 trillion next year.
Substantial spending on AI infrastructure could bolster economic growth expectations and, in turn, push U.S. Treasury yields higher. Previously, concerns regarding the sustainability of data center investments had prompted investors to shift into U.S. government bonds, causing the 10-year yield to fall by about 16.5 basis points over the past week to approximately 5.07%.
Meanwhile, oil prices remain a source of downward pressure on gold. WTI crude is trading around US$98.45 per barrel, having risen nearly 15% over the last two weeks. Tensions in the Middle East—including concerns that Iran could expand disruptions to shipping lanes, potentially affecting the Bab el-Mandeb strait and the Suez Canal—have kept energy risk premiums elevated and fueled concerns about inflation. Meanwhile, the Federal Reserve has entered a "blackout" period ahead of its monetary policy decision later this month. Several Fed officials continue to emphasize the importance of bringing inflation back to the 2% target, yet they have shown no particular urgency to raise interest rates in October. The market is currently more confident that the Fed will hold rates steady this month, while the probability of a hike in December remains high; consequently, movements in yields and interest rate expectations continue to be the primary drivers for the short-term direction of gold. (srh)