Due to the strong US currency and rising yields, gold drops to 1-week lows

6 Sep 2023 , 09:56 AM

On Wednesday, gold dropped to one-week lows after suffering its worst intra-day drop in a month in the previous session. This decrease came as the dollar and U.S. Treasury yields rose on predictions that interest rates would likely stay high.

After registering its largest one-day decline since August 1 on Tuesday, spot gold was muted at $1,924.41 per ounce. Futures for U.S. gold decreased 0.1% to $1,949.80.

In the most recent session, the benchmark 10-year bond yields increased to their highest level in almost a week, which decreased demand for metal while the U.S. dollar soared to a near six-month high versus a basket of currencies.

According to Federal Reserve Governor Christopher Waller, the most recent economic figures are allowing the American central bank room to determine if it has to increase interest rates once more.

Higher Treasury bond yields and U.S. interest rates increase the opportunity cost of keeping gold, which pays no interest.

According to a number of polls released on Tuesday, the pace of global economic activity continued to weaken last month as services companies struggled to meet poor demand caused by rising prices and borrowing charges that forced borrowers to cut down on spending.

According to a Reuters poll, China’s exports probably shrank at a slower rate in August, reflecting the fact that manufacturers are still under pressure after last month’s outbound shipments saw their worst performance since February 2020.

The largest gold-backed exchange-traded fund in the world, SPDR Gold Trust, reported that its holdings decreased by 0.1%.

In other news, spot silver prices fell by 0.1% to $23.49 per ounce, platinum prices fell by 0.3% to $923.34, and palladium prices rose by 0.1% to $1,212.85.

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