Gold Slumps as Fed Hawks Take Control, US Yields Soar to 5%
Gold prices took a hit on Wednesday, falling over 1.5% to $4,285 as investors grew more confident that the Federal Reserve would raise interest rates at its October meeting.
The Fed's hawkish remarks, made by several officials, contributed to this confidence. Neel Kashkari of the Minneapolis Fed said inflation is too high in 'all aspects' of the US economy, while Alberto Musalem of the St. Louis Fed stated that more rate hikes are likely needed to tame inflation.
US 10-year Treasury yields soared by 15 basis points to 5.12% as a result. The strong Purchasing Managers' Index (PMI) readings for September, which far surpassed expectations and were higher than the previous month's numbers, also propelled October tightening bets higher.
The US Dollar Index rose 0.7% to 101.22, providing a headwind for gold prices. Despite this, some analysts believe that waiting for confirmation is warranted before making any predictions about gold's future movements.