Gold declines in early trade as the US Fed remains hawkish

3 Oct 2023 , 09:23 AM

As Federal Reserve policymakers emphasized the possibility that interest rates will remain high, the price of gold continued to decline on Tuesday, recording its longest losing streak since August 2022 in the previous session. U.S. job opening figures are expected later in the day.

Spot gold was down 0.2% at $1,824.10 per ounce, falling for the seventh session in a row to its lowest level since March 9. Futures for U.S. gold decreased 0.4% to $1,840.50.

As a result of the U.S. government avoiding a partial shutdown and positive economic statistics, the dollar reached a 10-month high and Treasury yields remained close to 16-year highs.

According to a survey released on Monday, the U.S. manufacturing sector took a step closer to recovery in September as production increased and employment increased. The survey also revealed significant drops in factory input prices.

While Fed officials are united in their assertion that restrictive monetary policy will be needed for ‘some time’ to keep inflation below the 2% objective, internal disagreement exists about whether or not there will be another rate increase this year.

The opportunity cost of storing bullion, which is priced in dollars and does not pay interest, increases as interest rates rise.

According to the CME FedWatch tool, markets have priced in a 45% chance of another 25-basis-point rate hike this year but also a 41% chance of some monetary policy easing in the first half of 2024.

Platinum slid 0.1% to a one-year low of $876.42 while spot silver fell 0.8% to $20.90 per ounce, its lowest level in six and a half months. Up 0.5% to $1,206.84, palladium.

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