Traders' bets on rising US rates are causing gold to have its worst month in seven months

29 Sep 2023 , 10:05 AM

In the lead-up to a closely anticipated U.S. inflation report that is coming later in the day, gold prices on Friday braced for its largest monthly decline since February, lingering around levels at over six-month lows on the chances of higher-for-longer U.S. interest rates.

Spot gold was up 0.1% at $1,866.41 per ounce, on pace for a nearly 4% monthly decrease and its second straight quarterly decline. Futures for U.S. gold increased 0.3% to $1,883.50.

While Treasury yields were down from a 16-year high, the dollar declined from a 10-month high. Both, however, continued to be on track for their best quarters in four.

The U.S. economy continued to develop at a respectable rate in the second quarter, and this quarter, activity seems to have picked up.

Thomas Barkin, president of the Federal Reserve Bank of Richmond, stated on Thursday that it is uncertain whether additional monetary policy adjustments will be required in the near future.

Holding bullion, which is priced in dollars and does not pay interest, has a higher opportunity cost when interest rates rise.

In order to prevent the fourth partial government shutdown in a decade, the Democratic-led U.S. Senate moved on with a bipartisan interim funding plan on Thursday, while the House prepared to vote on partisan Republican spending bills that had no chance of passing. The job market in Britain has moderated from recent heights but is still competitive in many fields, according to recruiters.

The August personal consumption expenditures price index (PCEPI), the Fed’s favored inflation indicator, is scheduled for release at 12:30 GMT.

The price of spot silver increased by 0.2% to $22.65 an ounce, but it was also projected to have its worst month in seven.

Palladium held steady at $1,272.31 while platinum increased by 0.4% to $908.02. If the trend continues, both are ready to squeeze out quarterly gains. 

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