Gold hovers near 7-month low as Treasury yields and rate outlook weigh
Precious metals slip as Fed rate hike expectations strengthen and dollar firms
Dubai: Gold fell 1% on Wednesday, hovering near a seven-month low reached in the previous session, pressured by higher Treasury yields. Fading prospects of a permanent U.S.-Iran peace deal also kept concerns over inflation and Federal Reserve rate hikes elevated.
Spot gold was down 1% at $3,969.03 per ounce as of 0747 GMT. On Tuesday, bullion slipped to $3,942.99 per ounce, its lowest level since last November.
U.S. gold futures for August delivery fell 1.4% to $3,982.90 on Wednesday.
Gold recorded its largest quarterly drop since 2013 and posted its fourth consecutive monthly loss on Tuesday, as tensions in the Middle East fuelled inflation concerns and strengthened expectations of further Federal Reserve rate hikes.
“It looks like pressure from higher yields is what's pushing gold lower. The U.S. dollar is also slightly higher at the same time, which confirms the trend,” said Ilya Spivak, head of global macro at Tastylive.
The dollar strengthened, making dollar-denominated bullion more expensive for holders of other currencies, while yields on the benchmark 10-year U.S. Treasury note continued to rise.
Federal Reserve Bank of Cleveland President Beth Hammack said on Tuesday that it remains possible she will advocate for higher rates if inflation pressures fail to ease, underscoring a still hawkish policy outlook.
Traders are pricing in roughly a 67% chance of a rate hike in September, according to the CME FedWatch Tool, reflecting firming expectations of tighter monetary policy.
Investors are now awaiting June ADP employment data, due later in the day, and nonfarm payrolls figures on Thursday for further indications of the Fed’s rate path.
Oil prices rose after Iran said it would not meet senior U.S. envoys who travelled to the region following a recent escalation in hostilities, dimming prospects for a near-term diplomatic breakthrough.
Spot silver fell 1.8% to $57.53 per ounce, while platinum slipped 0.6% to $1,541.95, its lowest level since last November. Palladium declined 1.4% to $1,187.09.