Gold Dips as Dollar Strength and Higher Yields Weigh on Prices
Gold prices dipped slightly on Tuesday, driven lower by a stronger US dollar and higher Treasury yields. The spot price of gold fell by 0.3% to US$4,128.69 per ounce, while US gold futures saw minimal change, holding at US$4,156.00. The dollar's strength made gold more expensive for investors using other currencies, contributing to the decline.
The 10- and 30-year Treasury yields reached 24-year highs on Monday, reflecting ongoing weakness in the bond market. Despite these pressures, gold's losses were limited by reduced expectations of a Federal Reserve interest rate hike in October. This shift came after recent data showed slower-than-expected job growth in September and downward revisions to prior nonfarm payroll figures.
Analysts remain optimistic about gold's long-term prospects, citing geopolitical risks in the Middle East as a potential catalyst. Kyle Rodda, a senior financial market analyst at Capital.com, noted that significant changes in US rate expectations could also drive gold's next breakout. Meanwhile, traders are still pricing an 87% probability of a rate hike in December, according to CME's FedWatch Tool.
In other precious metals, spot silver dropped 0.6% to US$60.67, platinum lost 0.7% to US$1,710.08, and palladium eased 0.2% to US$1,170.15. Additionally, data showed that US services sector activity slowed in September, though strong domestic demand pushed a measure of business input prices to its highest level in over four years, suggesting elevated inflation could persist into 2027.