Gold Dips as Dollar Strength and Rising Yields Offset Fed Rate Hike Concerns
Gold prices dropped slightly on Tuesday, influenced by a stronger US dollar and rising Treasury yields. However, losses were kept in check by reduced expectations of a Federal Reserve interest rate hike in October. Spot gold fell 0.3% to $4,127.87 per ounce, while US gold futures remained steady at $4,155.30.
The dollar’s strength made gold more expensive for holders of other currencies. Meanwhile, the 10- and 30-year Treasury yields hit 24-year highs on Monday, reflecting ongoing negative sentiment in the bond market.
Analysts emphasized that gold’s long-term prospects remain positive, with geopolitical risks in the Middle East and US rate expectations likely to drive future price movements. Kyle Rodda, a senior financial market analyst at Capital.com, noted that any significant change in US rate expectations could provide a fresh catalyst for gold.
Earlier expectations of a Fed rate hike in October had softened after job growth data showed a slower-than-expected pace in September. However, traders still see an 87% chance of a rate increase in December. Higher interest rates typically reduce demand for non-yielding assets like gold.
Beyond gold, other precious metals also declined. Spot silver, platinum, and palladium each lost 0.7%, falling to $60.64, $1,709.75, and $1,164.24, respectively.