Gold Retreats Amid Rising Treasury Yields and German Inflation
The gold market has seen a decline due to rising Treasury yields and a higher inflation rate in Germany. The probability of a rate hike at the next meeting in October dropped to 39.3% after traders reacted to the oil market pullback, but Treasury yields continue to increase, putting pressure on gold as it offers no interest.
Germany's inflation rate rose from 2.9% in August to 3.3% in September, exceeding analyst expectations of 3.2%. The main driver of this increase was fuel costs. Analysts predict that the ECB will be forced to raise rates to combat inflation, which could impact gold markets.
The US dollar remained mostly flat against a broad basket of currencies, having a neutral effect on gold prices. Gold attempted to break above the $4200 level but lost momentum and retreated below the support range of $4160-$4180. If it falls below this range, it will likely move towards the next support at $4000-$4020.
On the other hand, a breakout above $4200 could push gold toward its resistance zone of $4300-$4320.