On September 6, gold prices continued their decline, reaching one-week lows as they extended losses from the previous session. This drop was primarily driven by rising U.S. Treasury yields and a strengthening dollar, fueled by expectations of sustained high interest rates.
Key Developments:
Gold’s Decline: Spot gold remained subdued at $1,924.41 per ounce by 0058 GMT, following its most significant one-day loss since August 1. Concurrently, U.S. gold futures slipped 0.1% to $1,949.80.
Dollar’s Ascension: In the previous session, the U.S. dollar reached nearly a six-month high against a basket of currencies. Simultaneously, benchmark 10-year bond yields climbed to their highest levels in over a week. These developments diminished appetite for gold.
Fed‘s Assessment: Federal Reserve Governor Christopher Waller commented that recent economic data has provided the central bank with the necessary space to assess whether further interest rate hikes are warranted.
Impact of Higher Rates: The rise in U.S. interest rates and Treasury bond yields elevates the opportunity cost of holding gold, which does not generate interest income.
Global Business Activity: Surveys conducted on Tuesday revealed that global business activity had largely slowed in the previous month. Services firms struggled due to weak demand as rising prices and borrowing costs led indebted consumers to rein in spending.
China’s Exports: A Reuters poll indicated that China’s exports likely contracted at a slower pace in August. This data underscores the continued pressure on manufacturers following the worst performance of outbound shipments since February 2020 in the previous month.
SPDR Gold Trust: The world’s largest gold-backed exchange-traded fund, SPDR Gold Trust, reported a 0.1% decrease in its holdings.
Other Precious Metals: In addition to gold’s decline, spot silver experienced a 0.1% drop, settling at $23.49 per ounce. Platinum also dipped by 0.3%, reaching $923.34, while palladium saw a slight uptick of 0.1%, reaching $1,212.85.
