Dovish Repricing Can't Save Gold as US Yields Soar
Gold prices have stalled at $4,155 on Thursday as the US Dollar strengthens and Treasury yields rise to their highest level since 2002. The elevated yields make holding non-yielding assets like gold more expensive, while a stronger dollar increases the cost of buying gold for investors using other currencies.
The ISM Manufacturing Purchasing Managers' Index (PMI) eased to 54.5 in September, missing forecasts, but the Prices Paid Index jumped above expectations, showing that factories are still facing strong cost pressures.
Despite softer-than-expected inflation data on Wednesday, which led markets to scale back expectations of a Federal Reserve rate hike this month, traders still see a 36% chance of a rate increase at the October 27-28 meeting.