On a strong US currency and rising yields, gold dropped to near 7-month lows

4 Oct 2023 , 10:04 AM

Gold prices were unchanged on Wednesday, hovering around the seven-month lows reached in the previous session, as rising bond and dollar yields in the United States, supported by positive jobs data, suggested that potential for additional monetary policy tightening.

Spot gold was unchanged at $1,823.59 per ounce, while U.S. gold futures were down 0.1% to $1,839.20.

Prices dropped for a seventh straight session on Tuesday, reaching their lowest levels since March, as the dollar surged as a result of data showing an unexpected rise in U.S. job opportunities in August.

On Wednesday, the yen was trading just above 150 to the dollar after an unexpected increase the day before sparked rumours that the Japanese government might have interfered to strengthen the yen.

Rising yields on long-term U.S. Treasury paper are seen by Federal Reserve officials as evidence that their tight money policies are effective, but for the time being at least, they do not appear to be alarming the economy.

For reference, U.S. 10-year bond yields were at 16-year highs, which decreased demand for bullion that does not pay interest.

U.S. Treasury Secretary Janet Yellen expressed her optimism for the future of the economy on Tuesday, noting that the labour market was ‘extremely strong’ and that short-term inflation was on the decline.

Top international automakers reported higher third-quarter U.S. new car sales on Tuesday, boosted by steadfast demand for the newest models and better supplies.

The largest gold-backed exchange-traded fund in the world, SPDR Gold Trust, said that on Tuesday, its holdings decreased by 0.2% to 873.35 tonnes.

Spot silver dropped by 0.1% to $21.14 per ounce in the previous session, reaching its lowest level since mid-March.

Platinum hit its lowest price in a year at $864.93, down 0.8%. Palladium fell 1.2% to $1,174.70 and was trading close to Tuesday’s 5-year lows.

For feedback and suggestions, write to us at [e-mail]