The Magazine for Asian Investors
Gold futures closed lower Wednesday (Aug. 3) on dollar strength, and higher U.S. Treasuries are a factor pressuring the market.
Markets were also under pressure as Federal Reserve officials, including Chicago Fed Chairman James Bullard, encouraged the Federal Reserve Board to raise interest rates.
- The gold futures fell $13.3, or 0.74%, at $1,776.4 an ounce.
- Silver was down 24.5 cents, or 1.22%, at $19.894 an ounce.
- The platinum contract fell $16.5, or 1.82%, at $888.5 an ounce.
- Palladium fell $82.30, or 3.9%, to close at $2,007.90 an ounce.
Gold contracts are under pressure from the appreciation of the dollar index against the six major currencies of the basket of currencies, which increased by 0.25% to 106.5030. The appreciation of the dollar made gold contracts more expensive for investors holding other currencies.
Gold futures also took a hit when 10-year U.S. Treasury bond yields jumped to 2.779%, with a rise in bond yields raising the opportunity cost of owning gold. This is because gold is an asset that does not yield interest.
Fed officials’ comments also put pressure on the gold market. Chicago Fed President James Bullard said the Fed needs to keep raising interest rates longer. If recent rate hikes have failed to curb inflation, which has reached a 40-year high.
Cleveland Fed President Loretta Mester also said the Fed needs to keep raising interest rates because there are currently no signs of U.S. inflation slowing.
CME Group’s FedWatch tool showed that investors were 68.5% expecting the Fed to raise rates by 0.50% at its September 20-21 meeting and 63.3% expecting a 0.25% rate hike at its November 1-2 meeting.
Investors are awaiting the publication of the U.S. non-farm payrolls figures tomorrow.
The Spot Market is Open
Thursday, August 4, 2022