Gold prices edged higher on Friday, although they remained near a one-week low reached in the previous session. The strength of the U.S. dollar and rising Treasury yields have been driven by the Federal Reserve’s hawkish stance on interest rates.
Here are the key points:
Spot gold was up 0.2% at $1,923.22 per ounce.
U.S. gold futures added 0.2% to $1,943.00.
The U.S. dollar is near a six-month peak due to expectations of higher interest rates.
Benchmark 10-year Treasury yields have reached 16-year highs, contributing to a broad sell-off in Wall Street.
Major central banks, including the Federal Reserve, have signaled their intent to maintain higher interest rates to combat inflation, even as two years of global policy tightening reach their peak.
The prospect of higher interest rates tends to discourage buying of non-interest-bearing assets like gold, which is priced in dollars.
The Fed‘s plan for a prolonged period of elevated interest rates could continue to put pressure on stocks and bonds in the coming months, although some investors are skeptical about whether the central bank will follow through.
U.S. jobless claims dropped to an eight-month low, indicating a tight labor market even as job growth slows.
There are concerns of a potential government shutdown in the U.S. as U.S. House Speaker Kevin McCarthy’s attempt to restart his stalled spending agenda failed.
Holdings in the SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, rose slightly to 878.83 tonnes.
In addition to gold, other precious metals also saw some movements:
Spot silver rose 0.3% to $23.44 per ounce.
Platinum gained 0.3% to $921.98.
Palladium steadied at $1,263.04.
The strength of the U.S. dollar and rising yields continue to influence the precious metals market, making it important for investors to closely monitor these factors alongside central bank policies and economic indicators.
