Gold vs. rates: US monetary policy makes the metal fall to 6-month lows

Gold vs.  rates: US monetary policy makes the metal fall to 6-month lows

Gold remains almost unchanged this Thursday, after having experienced a notable decline that brought it to its level lowest in about six months in last session. This situation is mainly due to the sustained strength of the dollar the US and rising yields of Treasury bondfactors that continue to put pressure on gold, an asset that does not generate interest.

This Thursday, gold spot traded in a flat line, trading at $1,874.29 per ounce, remaining close to its lowest level since March 13, reached during trading on Wednesday. For their part, the futures of gold In the United States they are quoted at $1,891.30.

The dollar remained near its 10-month highs compared to its main counterparts, as Treasury yields hit their highest point in 16 years. This is due to investors’ perception that the US economy will outperform its competitors amid higher interest rates.

USA: economic data remains positive

UBS analyst Giovanni Staunovo commented: “Despite the increase in Federal Reserve rates, economic data in the United States continues to show strength. “The expectation that the Fed is not done and may still implement more measures is putting pressure on the price of gold.”

Rising interest rates raise the cost of holding gold bullion, which does not earn interest, strengthening the dollar, the currency in which gold is traded. This month, the price of gold has registered a drop of more than 3%, heading towards its worst monthly performance since February. During trading on Wednesday, the metal suffered a 1.4% drop, its largest daily decline since July.

Minneapolis Fed President Neel Kashkari said Wednesday that he still doesn’t think rates have risen enough to bring inflation back to its 2% target, despite ample evidence supporting current economic strength.

The market, attentive to rates

As for Wednesday’s data, it revealed that Orders for long-lasting US manufactured goods rose in August and that business spending on equipment appeared to regain momentum.

Market attention is now focused on the revised US GDP growth rate for the second quarter and weekly jobless claims, which will be released later in the day. Additionally, the August personal consumption expenditures (PCE) price index, the Federal Reserve’s preferred inflation gauge, will be released on Friday.

Regarding other precious metals, spot silver showed a slight increase of 0.1%, reaching $22.54 per ounce. Additionally, platinum rose 0.3% to $889.63, while palladium rose 0.2% to $1,224.04.

Source: Ambito

Leave a Reply

Your email address will not be published. Required fields are marked *

Latest Posts