Gold Rises as Dollar, Yields Fall on Israel-Lebanon Ceasefire

Gold prices rose early on Thursday, supported by a weaker US dollar and declining Treasury yields after Israel and Lebanon agreed to a ceasefire. The precious metal gained as geopolitical tensions eased, reducing the opportunity cost of holding non-yielding assets like gold. The dollar index (DXY) slipped, reinforcing gold's inverse correlation with the greenback, while the real US 10-year yield—adjusted for inflation—also declined, further lowering the hurdle for gold as an alternative to bonds. This dynamic has been a key driver since 2022, when central banks globally began buying gold at record levels to diversify reserves amid geopolitical uncertainty and sanctions risk, with the People's Bank of China and other institutions adding hundreds of tonnes annually.

The ceasefire deal between Israel and Lebanon triggered a drop in oil prices and a broad risk-on move in financial markets, which weighed on the dollar and bond yields. Lower yields make gold more attractive relative to interest-bearing assets, while a softer dollar boosts gold's appeal for holders of other currencies. Live gold prices and charts on NowPrice show the metal trading near session highs as traders assess the implications of the truce. The COMEX-LBMA spread narrowed, indicating reduced delivery stress in the physical market, while ETF flows into GLD and IAU remained modest, suggesting that investment demand is still cautious compared to the strong jewelry demand seen in Asia, particularly in India and China, where import premiums have held firm.

Looking ahead, markets will focus on the durability of the ceasefire and any further developments in the Middle East. Traders will also watch upcoming US economic data, including nonfarm payrolls, for clues on the Federal Reserve's policy path. A sustained decline in yields could provide additional support for gold in the near term. If the ceasefire holds, risk appetite may persist, potentially capping gold's upside, but any renewed tensions or weaker-than-expected payrolls could reignite safe-haven flows. The interplay between DXY, real yields, and central bank buying will remain critical for gold's trajectory.