Strong Dollar Halts Gold's Rally

24 Oct 2024 , 09:34 AM

After hitting an all-time high the day before, gold prices remained stable Thursday as support from safe-heaven demand was countered by a stronger currency and an increase in U.S. Treasury yields.

From September to early October, U.S. economic activity stayed stable, with a modest increase in hiring, suggesting that the Federal Reserve will shortly decrease interest rates by 25 basis points.

According to CME’s FedWatch Tool, markets are pricing in a 90.4% chance of a 25 basis point drop at the U.S. Federal Reserve’s November meeting.

Spot gold was flat at $2,718.32 an ounce. At $2,732.10, U.S. gold futures increased by 0.1%.

As Middle East tensions and U.S. election anxiety increased the allure of gold as a safe haven, prices reached a record high of $2,758.37 on Wednesday.

Hezbollah claimed to have fired precision guided missiles at Israeli targets for the first time as Israeli strikes hammered the southern suburbs of Beirut on Wednesday.

With less than two weeks until the election on November 5, U.S. Vice President Harris and former President Trump are still tied in the seven most competitive states.

In the meantime, gold’s record run was hampered by the currency and benchmark 10-year Treasury yields remaining close to a three-month high. For other currency holders, gold costs more when the dollar is stronger.

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