Gold prices drop amid increasing dollar, Treasury yields
(MENAFN) In early trading on Wednesday, Gold prices experienced a slight decline as both the U.S. dollar and Treasury yields strengthened. This comes as traders are closely monitoring potential indications regarding the size of the anticipated interest rate cut by the Federal Reserve in September. Spot gold fell by 0.2 percent, reaching USD2,385.60 an ounce by 0310 GMT, while U.S. gold futures dropped by 0.3 percent to USD2,425.30 an ounce. According to IG analyst Yip Rong, the upward movement in U.S. Treasury yields and the robust dollar have exerted downward pressure on gold prices. However, he also noted that gold's decline might be tempered due to ongoing geopolitical tensions in the Middle East and fears of a global recession, as markets await more U.S. economic data for further clarity.
The dollar index rose to 103.25, making gold, which is priced in dollars, more expensive for international buyers. In response to a weak jobs report last week, traders adjusted their expectations, now anticipating a total rate cut of approximately 105 basis points by the year's end. However, the CME Group's FedWatch tool indicates that markets currently predict a 65 percent chance of a 50 basis point rate cut by the Fed in September, down from 85 percent the previous day. Meanwhile, U.S. Secretary of State Antony Blinken reiterated that the U.S. had urged both Iran and Israel to avoid escalating the conflict in the Middle East, although the Pentagon has warned it will not tolerate attacks on U.S. forces in the region.
In other precious metals markets, silver saw a slight increase of 0.1 percent in spot transactions, trading at USD27.0561 per ounce. Platinum prices rose by 0.3 percent to USD915.20 per ounce, and palladium also increased by 0.3 percent, reaching USD877.24 per ounce. These movements reflect the broader market dynamics influenced by geopolitical tensions and economic data releases, shaping investor sentiment and commodity prices.
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