Gold closes in the red as the dollar strengthens and the yield on U.S. Treasury bonds rises

Gold futures closed lower on Tuesday (Sept. 6) as markets were pressured by a strong dollar and a rise in U.S. Treasury bond yields. This was compounded by concerns that the U.S. Federal Reserve (Fed) will continue to raise interest rates.

  • The gold contract was down $9.7, or 0.56%, at $1,712.9 an ounce.
  • Silver futures were up 2.7 cents, or 0.15%, at $17.908 per ounce.
  • The platinum contract was up $15.6, or 1.91%, at $833.9 per ounce.
  • Palladium fell $52.90, or 2.6%, at $1,973.20 an ounce.

The dollar index rose 0.35% against the six major currencies in a basket of currencies to 110.2140, and the yield on the 10-year U.S. Treasury bond rose to 3.347%, the highest level since June this year.

A strong dollar makes gold contracts priced in dollars more expensive for investors holding other currencies, and rising bond yields increase the opportunity cost of owning gold. This is because gold is an asset that does not yield interest.

Investors are also concerned that strong growth in the U.S. services sector will push the Fed to raise interest rates. The Institute for Supply Management (ISM) reported that its services PMI rose to 56.9 in August from 56.7 in July, driven by an increase in new orders and employment.

Following the release of a robust services sector in the U.S., investors’ expectations regarding the Fed’s interest rate outlook rose. According to CME Group’s latest FedWatch tool, 74.0% of investors expected the Fed to raise rates by 0.75% to the 3.00-3.25% level at its September 20-21 meeting, and 26.0% expected the Fed to raise rates by 0.50%.

The Spot Market is Open

Wednesday, September 7, 2022

Metals
Updated at
USD
Bid/Ask
Ounce
Change

%Change
Gold
11.50
1,693.00
1,694.00
-9.20
-0.54%
1,691.00
1,704.70
Silver
11.50
17.89
17.99
-0.13
-0.69%
17.83
18.10
Palladium
11.50
844.00
854.00
-11.00
-1.29%
841.00
866.00
Rhodium
11.20
1,908.00
2,058.00
-14.00
-0.73%
1,898.00
2,078.00
Rhodium
05.00
13,100.00
15,100.00
0.00
0.00%
13,100.00
15,100.00

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