41 mins ago
Gold Faces Pressure as Yields Rise and Fed Bets Shift
Gold and silver prices fell last week and may continue moving up and down.
Investors are watching economic reports from the United States.
These reports include jobs, inflation, growth and consumer confidence data.
Higher interest rates can make gold less attractive because gold does not pay interest.
United States government bond yields have risen to very high levels, adding pressure to gold and silver.
Tensions involving Iran and other regions could still affect markets.
Oil prices are also important because conflicts can disrupt energy supplies.
A strong jobs report could increase expectations of higher interest rates and push gold lower.
A weak jobs report could reduce those expectations and help gold recover.
Gold and silver may remain volatile as United States economic data and West Asia tensions shape market sentiment.
United States 10-year Treasury yields reached their highest level since 2007, pressuring non-yielding bullion.
MCX October gold futures fell nearly 2.3% last week to Rs 1.5 lakh per 10 grams.
Global December gold futures declined 2.34% to USD 4,321.2 per ounce, while silver fell 3.5%.
The upcoming United States jobs report could influence expectations for the Federal Reserve’s October policy decision.
- Who
- Gold and silver traders, commodity analysts, the Federal Reserve, and United States policymakers are central to the market outlook.
- What
- Gold and silver are under pressure after weekly declines as bond yields rise and investors reassess the possibility of another Federal Reserve rate hike.
- Where
- The market impact is being tracked in India’s Multi Commodity Exchange and global commodity markets.
- When
- The developments concern the previous week and a holiday-shortened week ahead, including the upcoming nonfarm payrolls report.
- Why
- Higher United States Treasury yields, a potentially stronger dollar, profit-taking, and changing expectations for Federal Reserve policy are weighing on bullion; geopolitical tensions and oil prices remain additional influences.
Factors Supporting Bullion
Factors Pressuring Bullion
United States employment data
Factors Supporting Bullion
Weaker employment data could reduce expectations of another Federal Reserve rate hike, soften the dollar and support gold.
Factors Pressuring Bullion
Stronger employment data could reinforce rate-hike expectations and put further pressure on gold.
Geopolitical and energy risks
Factors Supporting Bullion
The United States-Iran standoff and continuing tensions in West Asia and the Russia-Ukraine conflict could support demand for defensive assets.
Factors Pressuring Bullion
Higher supplies from Saudi Arabia and Iraq have improved oil availability and weighed on crude prices, potentially reducing some inflation and risk support for bullion.
Currency and bond markets
Factors Supporting Bullion
A softer dollar or falling long-term yields could improve demand for dollar-denominated, non-yielding metals.
Factors Pressuring Bullion
A sustained United States dollar index above 101 and rising long-term Treasury yields could reduce demand for gold and silver.
Key facts
- MCX gold
- October futures fell Rs 3,500, or nearly 2.3%, last week to Rs 1.5 lakh per 10 grams.
- MCX silver
- Silver futures declined Rs 6,907, or 3%, to Rs 2.34 lakh per kilogram.
- Global gold
- December futures fell USD 103.7, or 2.34%, to USD 4,321.2 per ounce.
- Global silver
- Silver declined USD 2.35, or 3.5%, to USD 64.80 per ounce.
- Treasury yields
- United States 10-year Treasury yields reached their highest level since 2007, while 30-year yields approached 2004 highs.
- Key market test
- The United States nonfarm payrolls and unemployment data are expected to influence expectations for the Federal Reserve’s October decision.
- Trading closure
- Commodity markets will be closed Friday for Mahatma Gandhi Jayanti.
Quotes
Jateen Trivedi
VP Research Analyst for Commodity and Currency at LKP Securities
“The broader outlook remains cautious with volatility likely to stay elevated as the market will closely focus on the upcoming US nonfarm payrolls and unemployment data, which will be crucial in determining expectations around the Federal Reserve's October policy decision.”
thehansindia.com
“Gold remained highly volatile last week, trading within the Rs 1.5-1.54 lakh per 10 grams range and ending lower by more than 2 per cent as profit booking from higher levels continued as markets increasingly priced in the possibility of another Fed rate hike in October.”
thehansindia.com
Sources
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