Gold Prices Plunge Below Key Support Zone Amid Rising Bond Yields
Global gold prices are under pressure due to rising bond yields and a strengthening US dollar. As of September 2nd, spot gold price decreased by 0.19% to $4,320.3 per ounce, while December gold futures price fell by 0.66% to $4,367.4 per ounce.
The decline in gold prices is attributed to the rising bond yields, which reduce the attractiveness of gold as an asset that does not provide fixed income. The US dollar's strength also adds resistance to the precious metal.
Market analysts are closely watching the interest rate outlook of the US Federal Reserve (Fed), with recent statements from Fed officials indicating a possibility of interest rate hikes in September. Investors are betting nearly 70% on the possibility of the Fed increasing rates by 0.25 percentage points at this month's meeting.
According to Ryan McKay, senior commodity strategist at TD Securities, the decline in gold prices is a continuation of Fed Chairman Kevin Warsh's speech at Jackson Hole and Fed Governor Michael Barr's recent comments. The global bond market's sell-off further increases pressure on gold.