In a disheartening streak of losses, gold futures stumbled yet again on Monday, extending their decline for the sixth consecutive trading day. The market bore the weight of a robust U.S. dollar and mounting worries about surging interest rates.
Gold futures experienced a sharp drop of $18.90, or 1.01%, concluding the session at $1,847.20 per ounce. This marked the lowest closing point since March 9, 2023. The turbulence also had a ripple effect on other precious metals:
- Silver futures tumbled by $1.029, or 4.58%, closing at $21.421 an ounce.
- Platinum futures suffered a decline of $29.10, or 3.18%, ending at $886.80 per ounce.
- Palladium retreated by $50.10, or 3.99%, settling at $1205.90 an ounce.
The surge in the U.S. dollar, measured by the dollar index against a basket of six major currencies, recorded a 0.74% gain, reaching 106.903 overnight. The dollar’s ascent reduced the attractiveness of gold contracts priced in dollars, deterring investors from the precious metal.
Adding to the pressure was mounting apprehension regarding the Federal Reserve (Fed) keeping interest rates elevated in a bid to combat inflation. Michelle Bowman, a member of the Fed Board of Governors, voiced her support for continuing interest rate hikes, should data indicate that inflation persists at a slow retreat.
Investors are also grappling with the possibility of robust U.S. economic data bolstering the Fed’s resolve to maintain high interest rates. The U.S. Institute for Supply Management (ISM) reported a surge in the U.S. manufacturing index to 49.0 in September, marking the highest level since November 2022, and surpassing analysts’ expectations of 47.7, up from 47.6 in August.
Furthermore, the U.S. Department of Commerce disclosed a 0.5% month-on-month increase in construction spending for August, following a 0.9% rise in July.
Investors are now keeping a watchful eye on the upcoming release of the U.S. non-agricultural employment numbers for September, scheduled for Friday. Analysts’ predictions anticipate a growth of 163,000 jobs in September, after adding 187,000 jobs in August. The unemployment rate for September is also expected to dip to 3.7% from August’s 3.8%.
The gold market faces turbulent times ahead as it grapples with the intersection of a resurgent dollar and the Fed’s monetary policy decisions amidst a shifting economic landscape.
The Spot Market is Open
Tuesday, October 3, 2023