Gold Prices Plunge as US Treasury Yields Reach Historic High

Gold prices continued to fall on Thursday in European trading, marking their second consecutive day of losses and heading toward multi-week lows. The metal fell 0.6% to $4,262.60 an ounce, from an opening level of $4,286.86, after reaching a high of $4,303.39.

The decline in gold prices was attributed to rising US Treasury yields and a stronger dollar. The US Dollar Index rose 0.1% on Thursday, extending gains for a fourth consecutive session and approaching a break above its two-month high of 101.23 points.

The yield on the 10-year US Treasury note also hit a fresh 19-year high of 5.148%, providing further support for the dollar. Federal Reserve officials, including Minneapolis President Neel Kashkari, St. Louis President Alberto Musalem, and Chicago President Austan Goolsbee, expressed their concern over inflationary pressures and the need for further interest rate hikes.

Preliminary data showed that the US manufacturing sector expanded at its fastest pace in 52 months in September, while the services sector grew at its fastest pace in 59 months. As a result, the probability of the Federal Reserve leaving interest rates unchanged at its October meeting fell from 48% to 25%, while the probability of a 25-basis-point rate hike increased from 52% to 75%.