Gold continues decline as dollar, bond yields rise

Bengaluru — Gold prices fell further on Thursday, after declining more than 1% in the previous session, dragged by strengthening in the US dollar and treasury yields amid continued jitters over sharp rate hikes by the Federal Reserve.

Spot gold fell 0.2% to $1,626.12 per ounce, as of 3.58am GMT. Prices earlier hit a fresh three-week low at $1,621.20.

US gold futures were down 0.3% to $1,629.70.

The dollar index rose 0.1%, hurting gold’s appeal for those holding other currencies, while the benchmark 10-year treasury yields rose to its highest level since mid-2008.

“The trend for gold has been down overall, and the catalyst has been a parallel rise in both the dollar and yields around the Fed’s increasingly hawkish stance,” said Ilya Spivak, a currency strategist at DailyFX.

Gold might consolidate above the $1,600-figure, with the US core personal consumption expenditures data, due next week, being the next major inflection point, Spivak added.

The Fed’s Beige Book survey showed US economic activity expanded modestly in recent weeks, though it was flat in some regions and declined in a couple of others, while firms noted that price pressures remained elevated.

The report did little to temper expectations for a fourth straight 75-basis-point (bps) rate hike in November.

While gold is considered a hedge against inflation and economic turmoil, rising US interest rates have increased the opportunity cost of holding the zero-yield bullion, and boosted the dollar. Gold is down 11% for the year so far.

Indicative of sentiment, holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund (ETF), fell 6.08 tonnes on Wednesday, their biggest one-day outflow since July 6.

Spot silver fell 0.9% to $18.28 per ounce, platinum dipped 0.2% to $882.25 and palladium slipped 0.7% to $1,985.25.

Reuters