Gold prices, which had reached their lowest point in more than a month on Tuesday, experienced a slight increase on Wednesday. This uptick can be attributed to slipping Treasury yields and a stronger U.S. dollar, both of which helped alleviate some of the pressure on the precious metal.
Price Action
- Gold futures for December delivery (GC00, -0.03% GCZ23, -0.03%) rose by $1.90, or 0.1%, to $1,937 per ounce on Comex.
- Silver futures for September delivery (SI00, +0.28% SIU23, +0.28%) saw an increase of 10 cents, or 0.5%, reaching $22.76 per ounce.
- Palladium futures for September delivery (PA00, -1.02% PAU23, -1.02%) declined by $16.60, or 1.3%, to $1,222 per ounce.
- Platinum futures for October delivery (PL00, -0.38% PLV23, -0.38%) experienced a decrease of $3.60, or 0.4%, settling at $888.60 per ounce.
- Copper futures for September delivery (HG00, -0.03% HGU23, -0.03%) remained relatively stable at $3.67 per pound.
Market Drivers
Gold prices have been continuously declining in recent weeks due to the rise in global bond yields and the recovery of the U.S. dollar. Both the euro (EURUSD, +0.07%) and the Japanese yen (USDJPY, +0.11%) have witnessed some losses against the American currency.
Rising Crude-Oil Prices and Economic Growth Bring Inflation Concerns
Rising crude-oil prices and stronger-than-expected U.S. economic growth are raising concerns about a potential re-acceleration of inflation. This situation could lead the Federal Reserve and other central banks to continue raising interest rates, potentially impacting gold prices.
Gold’s Recent Performance
According to Marios Hadjikyriacos, a senior investment analyst at XM, gold has been experiencing a decline this month due to a short-term downtrend line. The rally in real yields and the recovery of the dollar have diminished the attractiveness of the precious metal. However, despite these factors, gold remains only 8.5% away from its record highs.
It is worth noting that it is challenging to imagine what could trigger a significant rise in bullion prices without the occurrence of a recession.
The Impact of the Dollar Index and Treasury Yields
The ICE U.S. Dollar Index (DXY), which measures the strength of the greenback against a basket of other currencies, fell by 0.1% on Wednesday to 103.11. However, it has experienced a 3.2% increase in the past month.
Furthermore, the yield on the 10-year Treasury note (BX:TMUBMUSD10Y) declined by 2.5 basis points to 4.190%. This drop follows its recent rise to the highest level in approximately 10 months, according to Dow Jones Market Data. It’s important to note that bond yields move in an inverse relationship with prices.