Gold prices saw a slight decline on Monday, primarily due to a marginal increase in U.S. bond yields. Investors are eagerly awaiting a speech by Federal Reserve Chair Jerome Powell later this week, hoping to gain more clarity on the interest rate outlook.
Spot gold dropped by 0.4% to $1,983.49 per ounce, after briefly surpassing the critical $2,000 level on Friday. U.S. gold futures also fell by 0.4% to $1,990.60.
Kelvin Wong, Senior Market Analyst for Asia Pacific at OANDA, highlighted the significance of U.S. 10-year Treasury yields, stating, “The major factor that will influence gold in the near-term will be the U.S. 10-year Treasury yields… if you start to see a resurgence in yields, gold could break below the key support level around $1,974.”
Benchmark 10-year Treasury yields rose to 4.5910% after touching a five-week low on Friday, which reduced the attractiveness of non-yielding gold. The recent soft jobs report, indicating slower U.S. job growth in October and the smallest increase in annual wages in almost 2.5 years, has raised expectations that the Fed may halt its rate-hiking campaign. Consequently, the dollar reached a six-week low.
Traders are now pricing in a 95% chance that the U.S. central bank will keep rates unchanged in December, with an 86% probability that the first policy easing could occur as early as June.
Investors are keenly watching for cues regarding the Fed’s interest rate trajectory, as nine Fed members are scheduled to speak this week, including Jerome Powell’s speech on November 9.
Furthermore, the SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, reported a 0.20% increase in holdings to 863.24 tonnes on Friday.
ANZ analysts noted that ETF holdings had risen by 1 million ounces in the last two weeks as speculators covered short positions. Nonetheless, gold’s performance hinges on the eventual conclusion of the Fed’s hiking cycle.
In the precious metals market, spot silver decreased by 0.2% to $23.14 per ounce, platinum fell by 0.4% to $926.14, and palladium gained 0.5% to reach $1,124.46.
