Rising Dollar and Interest Rates Weigh on Gold

7 Aug 2024 , 09:40 AM

Gold prices fell on Wednesday as the US dollar and Treasury yields rose, although forecasts on a Federal Reserve rate drop in September curbed additional losses.

Spot gold was down 0.2% to $2,385.23 per ounce.  Gold futures lost 0.3% to $2,425.50.

The dollar has recovered ground, making bullion more expensive for other currency holders. Meanwhile, the benchmark US 10-year Treasury yields rose.

The CME FedWatch Tool predicts a 70% chance of a 50-basis-point rate drop in September. Zero-yield gold thrives in a low-interest rate economy.

Fed policymakers pushed back on Monday against the assumption that weaker-than-expected July job data indicates the economy is in a recession, but they also warned that rate decreases will be required to avert such a result.

SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, increased its holdings by 0.37% to 848.06 tonnes on Tuesday from 844.90 tonnes.

On the geopolitical front, the United States has indicated to Iran and Israel that the Middle East conflict should not escalate, Secretary of State Antony Blinken said on Tuesday, despite the Pentagon’s warning that it would not accept attacks on its forces in the region.

Spot silver fell 0.2% to $26.99 per ounce, while platinum jumped 0.31% to $914.90 and palladium increased 0.13% to $875.77.

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