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Dollar rise, bond yields recovery pressure gold prices

gold prices

Gold prices fell this morning, Wednesday, pressured by the rise of the US dollar and the recovery of bond yields.

The US Treasury yields come ahead of the US non-farm payrolls data.

Spot gold prices fell 0.5 percent to $1,750.51 an ounce by 0723 GMT, while US gold futures fell 0.7 percent to $1749.40.

Gold prices

The dollar rose towards its highest levels in 2021, which reduced the attractiveness of gold for holders in other currencies, the benchmark 10-year US Treasury yield reached its highest level since June.

According to Reuters, Kyle Roda, an analyst at IG Markets, said that the momentum of the gold price is waning on the background of monetary policy expectations.

“There remain significant indications of cost pressures in the global economy and that will keep the focus on central banks and policy tightening.”

Silver fell in spot transactions 1.1 percent to $ 22.42 an ounce, platinum fell 1.4 percent to $ 948.02, and palladium fell 0.9 percent to $ 1896.66.

Job data

In a related context, Jeffrey Haley, senior market analyst for the Asia-Pacific region at OANDA, said weak stocks are pushing Asian investors to buy the dollar, which is putting pressure on gold.

He added, “The metal will be in a range between 1,750 and 1,785 dollars before the US jobs report.”

Aside from inflation, fragile US-China trade relations, China’s Evergrande debt crisis and impasse over US debt ceiling have stimulated some safe-haven inflows into gold as well, providing a floor for bullion prices.

“Gold may find support on dips to $1,750 this week, with rising inflation and US financial concerns,” Haley said.

Haley added that while uncertainty will support gold to some extent, the direction of US monetary policy will ultimately be the winner.

Non-farm payrolls are expected to show continued improvement in the labor market, likely allowing the Federal Reserve to start cutting stimulus before the end of the year.

Lower stimulus and higher interest rates raise bond yields and put pressure on gold as it translates into an increased opportunity cost of holding interest-free bullion.

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