Gold closes in the red due to the strong U.S. dollar, rising Treasury yields, and the expected interest rate hike

Gold futures closed lower for the fifth straight day on Thursday (Sept. 1), with markets pressured by a strong dollar and rising bond yields. In addition, the U.S. Federal Reserve (Fed) is expected to raise interest rates at an accelerated pace to curb inflation.

  • Gold futures fell $16.9, or 0.98%, at $1,709.3 per ounce.
  • Silver was down 21.6 cents, or 1.21%, at $17.666 per ounce.
  • The platinum contract was down $21.5, or 2.6%, at $805.5 an ounce.
  • Palladium fell $82.60, or 4%, at $1,996.30 an ounce.

The dollar index rose 0.92% against the six major currencies in a basket of currencies to 109.6930, while the yield on two-year U.S. Treasury bonds rose to 3.522%, its highest level since November 2007.

Rising U.S. government bond yields will increase the cost of holding gold since gold is a non-interest-bearing asset. A strong dollar will make gold contracts more expensive for investors holding other currencies.

In addition, investors expect that lower-than-expected unemployment in the U.S. would prompt the Fed to raise interest rates further. Initial jobless claims fell by 5,000 to 232,000 last week, according to the Labor Department. That’s the lowest level since June.

CME Group’s latest FedWatch tool shows that investors are 74.0% anticipating that the Fed will raise rates by 0.75% to 3.00-3.25% at its September 20-21 meeting, and only 26.0%. The Fed will raise interest rates by 0.50%

The Spot Market is Open

Friday, September 2, 2022

Metals
Updated at
USD
Bid/Ask
Ounce
Change

Low/High
Gold
11.00
1,699.80
1,700.80
+1.60
+0.09%
1,695.30
1,701.50
Silver
11.00
17.88
17.98
+0.08
+0.42%
17.77
18.00
Platinum
11.00
830.00
840.00
+2.00
+0.24%
826.00
842.00
Palladium
11.00
1,950.00
2,100.00
+20.00
+1.04%
1,922.00
2,104.00
Rhodium
05.00
12,600.00
14,600.00
0.00
0.00%
12,600.00
14,600.00

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