On Wednesday, gold prices continued to decline and reached their lowest point in a week as U.S. Treasury yields and the currency rose on speculation that interest rates will likely stay high.
By 0313 GMT, spot gold was down at $1,925.70 an ounce, having experienced its worst one-day drop since August 1. To $1,951, U.S. gold futures saw a 0.1% decline.
While 10-year bond yields were at over one-week highs as markets assessed clues on interest rates, the U.S. dollar remained close to six-month highs reached on Tuesday.
Gold costs more for holders of foreign currencies when the dollar is higher.
Governor of the Federal Reserve Christopher Waller stated that the most recent economic statistics gave the American central bank room to determine whether it needed to increase interest rates once more.
Market strategist Yeap Jun Rong at IG said, “Fed’s guidance for policymaking to be on a meeting-by-meeting basis has kept bets of additional tightening in November/December alive.”
A rise in oil prices, he continued, does not much improve the forecast for global inflation and has further persuaded investors to hold rates high. He added that the U.S. CPI data due out next week will define the Fed’s rate outlook for the upcoming months.
Higher Treasury bond yields and U.S. interest rates increase the potential cost of keeping gold, which pays no interest.
Numerous polls released on Tuesday revealed that the pace of global corporate activity generally slowed down last month, which increased demand for the dollar rather than gold as a safe haven.
The largest gold-backed exchange-traded fund in the world, SPDR Gold Trust, reported that its holdings decreased by 0.1% on Tuesday.
Spot silver was stable at $23.53 per ounce, platinum fell by 0.3% to $923.16, while palladium increased by 0.1% to $1,213.46.