Gold rallies to 5-week high on weaker USDX, dip in U.S. Treasury yields

NEW YORK (July 22) Gold prices are sharply up at midday and hit a five-week high. Silver prices are modestly higher and hit a nearly 14-year high today. The precious metals are getting a boost from a slumping U.S. dollar index this week, as well a downtick in U.S. Treasury yields. August gold was last up $32.40 at $3,439.10. September silver prices were last up $0.196 at $39.52.

Technical buying is also featured in gold and silver markets today, as the overall chart postures for the metals are firmly bullish.

The greenback bulls are losing momentum. The U.S. dollar index last week hit a three-week high and prices have rebounded well off the early-July low. However, Bloomberg reports currency options markets are signaling the U.S. dollar will come under renewed pressure heading into August. One-month risk reversals in the Bloomberg Dollar Spot Index have shifted into negative territory, favoring protection against dollar weakness. Peter Kinsella, head of foreign-currency strategy at Union Bancaire Privee Ubp SA, told Bloomberg "we could see a weaker dollar" and that the dollar "probably hasn’t bottomed out yet.”

The other key outside markets today see Nymex crude oil futures weaker and trading around $66.00 a barrel. The yield on the benchmark 10-year U.S. Treasury note is presently a around 4.3%.  

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