Short

Gold Holds Steady Amid Rising Treasury Yields and Fed Tightening

Updated

In the early Asian trading session, gold remains stable, having pulled back overnight due to the increase in U.S. Treasury yields. Bond yields, which move in the opposite direction of both bond prices and precious metals, exerted downward pressure on gold. Furthermore, the release of fresh data overnight indicating a strengthening U.S. economy has heightened expectations of further tightening by the Federal Reserve. This has raised the possibility of the Fed maintaining higher interest rates for an extended period, which is likely to exert downward pressure on the price of gold, as noted by analysts at ANZ. As a result, spot gold is currently showing minimal movement, trading at $1,916.29 per ounce.

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Gold hovered near a one-week low on Thursday, continuing its five-day streak of declines. Meanwhile, the dollar remained at its highest level since mid-March, driven by data indicating an unexpected strengthening of the U.S. services sector in August.

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* Spot gold (GOLD) inched up by 0.1% to reach $1,917.99 per ounce as of 0120 GMT, marking its lowest point since August 29th. Meanwhile, U.S. gold futures (GOLD) declined by 0.1%, settling at $1,942.20.

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Gold prices remained close to a one-week low on Thursday after experiencing five consecutive sessions of declines. This downward trend coincided with the dollar maintaining its position at mid-March highs, driven by unexpected growth in the U.S. services sector in August.

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Spot gold (GOLD) remained stable at $1,919.68 per ounce as of 0410 GMT, but continued to linger near its lowest point since August 29th, which it reached in the previous session. Meanwhile, U.S. gold futures (GOLD) maintained their position at $1,944.00.

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The U.S. dollar sat at its highest level since March 16, while the benchmark U.S. Treasury yield saw an increase following the release of robust U.S. services sector data on Wednesday. This data suggested that inflationary pressures are still present.

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On Thursday, gold remained under $1,920 per ounce, maintaining recent losses and encountering pressure from a surging dollar due to unexpectedly robust U.S. services sector data, which amplified concerns about inflation and potential interest rate hikes.

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On Wednesday, Boston Fed President Susan Collins emphasized the importance of the U.S. central bank proceeding cautiously with its next monetary policy moves, even as she acknowledged indications of progress in curbing inflation.

According to a Federal Reserve report released on Wednesday, U.S. economic growth remained moderate in July and August, coinciding with a cooling labor market and decreasing inflationary pressures.

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