On Monday, September 25th, gold futures experienced a downward spiral, driven by the unwavering ascent of the U.S. dollar and the relentless climb of the 10-year government bond yields, which hit their highest point in 16 years.
Gold futures endured a sharp decline of $9, equivalent to a 0.46% drop, concluding the day at $1,936.60 per ounce. In a parallel descent, silver tumbled by 45.90 cents, marking a 1.93% loss, with its final value resting at $23.385 an ounce. The platinum futures market was not exempt from the bearish trend either, as it registered a decrease of $16.60, representing a 1.78% dip, to reach $917.50 per ounce. Palladium also took a hit, falling by $24.10, or 1.9%, and settling at $1232.00 an ounce.
The surge in the U.S. dollar index against a basket of six major currencies, boasting a 0.4% rise to 105.999, further exacerbated the situation. Simultaneously, the yield on the 10-year U.S. Treasury note reached an overnight pinnacle of 4.505%.
The strengthening dollar has an adverse impact on gold contracts priced in dollars, rendering them less appealing to investors who hold alternative currencies. Additionally, the soaring U.S. bond yields amplify the opportunity costs associated with holding gold, primarily because gold stands as an asset devoid of interest-based returns.
In the forthcoming week, investors will keep a keen eye on a slew of economic data and carefully scrutinize statements from Federal Reserve officials in search of definitive cues concerning the Fed’s interest rate trajectory. Noteworthy economic indicators to watch include the Gross Domestic Product (GDP) figures for the second quarter of 2023 and the Personal Consumption Expenditures Price Index (PCE) for August. Of particular significance, the PCE Index serves as a critical gauge of inflation in the eyes of the Federal Reserve. This index’s prominence stems from its ability to detect shifts in consumer behavior and its comprehensive coverage of the prices of goods and services, encompassing a broader spectrum than the Consumer Price Index (CPI).
As the markets navigate these turbulent waters, investors and analysts alike remain on high alert, acutely aware of the intricate interplay between the U.S. dollar, bond yields, and precious metals, all of which continue to shape the economic landscape.
The Spot Market is Open
Tuesday, September 26, 2023