Due to a strong dollar and elevated Treasury yields, gold prices remained stable on Thursday, although they were still close to the six-month low they had reached the previous session. Markets were waiting for U.S. economic data for hints about the Federal Reserve’s interest rate trajectory.
Spot gold was steady at $1,874.49 per ounce as of 04:35 GMT, following a 1.4% loss on Wednesday—its worst daily loss since July. At $1,891.30, U.S. gold futures were unchanged.
According to data released on Wednesday, company expenditure on equipment increased in August and orders for durable U.S.-made items increased.
Hugo Pascal, a precious metals trader at InProved, stated that “Durable goods (figures) were higher than expected — that’s why the 10-year (Treasury yield) was higher, that’s why the dollar also moved higher, and that’s why we saw selling pressure for gold.”
In comparison to its main peers, the dollar reached a 10-month high, and Treasury yields reached a new 16-year high as investors wagered that the U.S. economy will outperform its rivals in an environment of high interest rates.
Neel Kashkari, president of the Minneapolis Fed, said on Wednesday that despite plenty of indications of continued economic strength, it is still unclear if the U.S. central bank has raised rates to their maximum level.
The opportunity cost of storing bullion, which is valued in dollars and does not pay interest, increases as interest rates rise.
The August personal consumption expenditures (PCE) price index, the Fed’s preferred inflation gauge, is due on Friday, and the market’s attention now shifts to the revised U.S. GDP growth rate for the second quarter and weekly unemployment claims due later in the day.
A stopgap funding package was rejected by senior congressional Republican Kevin McCarthy on Wednesday, which accelerated the fourth partial closure of the US government in a decade.
Platinum nudged up 0.1% to $888.25 while spot silver fell 0.2% to $22.48 per ounce.
Palladium dropped 0.2% to $1,219.83, and if losses continue, it will continue to decline for a sixth session.