Gold futures faced a second consecutive day of decline on Tuesday (May 23) as the market was weighed down by a strong dollar and a rally in US Treasury yields.
Gold futures recorded a decrease of $2.70, or 0.14%, settling at $1,974.50 per ounce. Similarly, silver futures experienced a downturn of 23.70 cents, or 0.99%, reaching $23.624 per ounce. Platinum futures fell by $19.70, or 1.83%, closing at $1,057.60 per ounce. Palladium futures also declined by $45.50, or 3.1%, settling at $1,446.70 per ounce.
The dollar index, which compares the US currency against a basket of six major currencies, witnessed a 0.28% increase, reaching 103.4864. Furthermore, the overnight 10-year Treasury yield rose to 3.753%.
The strengthening of the dollar leads to higher costs for investors in other currencies when purchasing gold contracts, which are priced in dollars. Additionally, the surge in US bond yields raises the opportunity cost of holding gold since it is a non-interest-bearing asset.
Investors are closely monitoring the ongoing negotiations surrounding the US debt ceiling. Additionally, they are keeping a close watch on the release of the minutes from the Federal Reserve’s May meeting (Fed) and the Personal Consumption Expenditure Index (PCE) this week. These updates will provide insights into the Fed’s potential interest rate direction.
The PCE index holds particular significance for the Fed as it serves as a key gauge of inflation and offers insights into changes in consumer behavior. It encompasses a broader range of prices for goods and services compared to the Consumer Price Index (CPI) data, making it a vital indicator for the central bank’s decision-making process.
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Wednesday, May 24, 2023