A month's worst week for gold due to rising rates and the dollar

10 Nov 2023 , 10:40 AM

Following hawkish comments from Federal Reserve Chair Jerome Powell, Treasury yields and a stronger US dollar contributed to Friday’s flat gold prices, which put the metal on course for its worst week in almost a month.

Spot gold fell to its lowest level since October 18 on Thursday, but it was only slightly higher at $1,959.74 per ounce by 01:27 GMT. Gold futures in the US dropped 0.3% to $1,964.50.

With gold down 1.6% so far this week, it was also expected to lose for a second straight week.

Powell stated on Thursday that U.S. Fed policymakers ‘are not confident’ that interest rates are now high enough to win the war against inflation and may be approaching the limit of their ability to get assistance in reducing price pressures.

Benchmark 10-year US Treasury yields increased after Powell’s remarks, rising from below one-month lows and deterring investors from purchasing non-yielding bullion.

As this was going on, the dollar index was about to have its strongest week against its competitors, driving up the price of gold for holders of other currencies.

Traders spread bets on the Fed’s probable first interest rate decrease, which is expected to happen in June of next year instead of May.

The opportunity cost of storing gold increases with higher rates.

According to data, the number of Americans submitting new claims for unemployment benefits decreased last week, indicating that layoffs are still rare despite some indications that the robust job market is cooling.

According to Gaza officials, Israel conducted airstrikes on or close to three hospitals on Friday, in the Middle East.

At $22.68 an ounce, spot silver increased by 0.3%, while platinum remained unchanged at $859.66. Although palladium was hovering close to its lowest point since 2018, it did rise 0.8% to $999.71 per ounce.

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