On Wednesday, as markets made preparations for the possibility of higher interest rates, gold prices fell around their lowest levels in more than a month.
By 0250 GMT, spot gold was down at $1,899.98 per ounce after breaching a crucial $1,900 barrier and falling to its lowest level since August 23 on Tuesday. To $1,918.20, U.S. gold futures declined by 0.1%.
As Treasury yields remained high on the expectation of higher U.S. rates for longer, the dollar maintained its strength and held steady at a 10-month high against its major counterparts.
40% of the time, the Federal Reserve will have to raise interest rates “meaningfully” in order to combat inflation.
The opportunity cost of storing bullion, which is valued in dollars and does not pay interest, increases as interest rates rise.
the narrative that rates would remain higher for a longer period of time appears to be outweighing safe-haven flows for the yellow metal.
To provide some rationale that the Fed might decide not to carry out its most recent rate hike and have greater policy flexibility for rate cuts if necessary, it may be necessary to wait for a number of data points in the future, most notably the upcoming inflation and job report.
On Friday, the Federal Reserve will release its favourite inflation indicator, the US personal consumption expenditures (PCE) index. On October 6, the Labour Department will release the monthly employment data, and on October 12, the CPI report.
In September, consumer confidence in the United States hit a four-month low as a result of growing economic fears and ongoing concerns about price increases.
The largest gold-backed exchange-traded fund in the world, SPDR Gold Trust, reported that its holdings fell to a more than four-year low.
Spot silver prices decreased by 0.4% to $22.78 an ounce, platinum prices were stable at $904.04, while palladium prices increased by 0.7% to $1,231.79.