Gold's recovery uncertain below $4,200 as Treasury yields stay high

Gold rose 0.4% to $4,170 on the day and showed some stability this week. Nonetheless, the advance remains unconvincing at this stage.

The bond market remains the core focus. Gold took a hit on Monday, dropping as much as 4% to roughly $4,110 as US Treasury yields jumped and markets dealt with the possibility of persistently higher rates.

Although gold rebounded to near $4,200 overnight, Treasury yields still offer little relief for gold buyers. Ten-year yields stay near multi-decade highs, at about 5.28% after briefly touching 5.30% earlier. A softer US PCE price report yesterday did not stop the bond vigilantes, and another yield increase remains possible.

Higher yields increase the opportunity cost of gold, a non-yielding asset. Selling pressure may have eased, but a clear macro headwind remains.

Buyers have defended the $4,100-$4,120 zone. That area also aligns roughly with the 78.6 Fib retracement level of the July-to-August rally, near $4,117.

Nevertheless, a bounce after a steep drop does not guarantee the correction is complete. Price action remains hesitant.

Gold attempted to climb above $4,200 earlier this week but hit its 100-hour moving average and was pushed back. Today, the price recovers from earlier lows but stays below that moving average, near $4,191.

Until buyers regain and stay above $4,200, the latest move should be viewed as consolidation after the selloff, not a meaningful recovery.

Beyond that, the next level to watch is the 200-hour moving average, near $4,260.

For now, selling pressure has stalled but not fully reversed. With gold below $4,200 and Treasury yields threatening new highs, buyers still need to work before a convincing recovery emerges.