Geopolitical risk was once again back on investors’ radar, with gold and US government bonds in demand on Monday after Saudi Arabia’s leadership moved over the weekend to consolidate power around its young crown prince.
Uncertainty over the geopolitical fallout from the kingdom’s arrests of dozens of princes and business tycoons pushed yields on the benchmark 10-year Treasury down nearly 3 basis points to 2.3127 per cent, its lowest level in over two weeks. Yield moves inversely to price.
The broader shift into haven assets also drove up prices for gold. The precious metal is up nearly 1 per cent to $1,281.21 a troy ounce, putting it on track for its biggest one-day gain in six weeks.
Demand for gold was also bolstered by the falling buck. The dollar index, a gauge of the buck against a basket of peers, slid 0.2 per cent to 94.75. Gold is dollar-denominated and weakness in the buck makes gold cheaper for foreign buyers.
Monday’s rebound came after gold clocked its third consecutive weekly decline on Friday. The yellow metal is up nearly 12 per cent so far this year.
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