Gold Falls as Dollar and Treasury Yields Weigh on Prices
Gold prices fell on Tuesday as a stronger U.S. dollar and elevated Treasury yields put pressure on the precious metal.
Investors are also waiting for the Federal Reserve’s September meeting minutes for clues about the central bank’s monetary policy outlook.
Gold Prices Move Lower
Spot gold fell 0.5% to $4,120.16 per ounce.
Gold futures declined 0.2% to $4,146.80 per ounce.
XAG/USD fell 1.2% to $60.35 per ounce. XPT/USD declined 1.3% to $1,703.71, while palladium fell 1.4% to $1,161.00.
The U.S. Dollar Index rose 0.1% to 102.27.
Dollar and Treasury Yields Pressure Gold
A stronger U.S. dollar was one of the factors weighing on gold prices.
A stronger dollar typically makes gold more expensive for buyers using other currencies.
Higher Treasury yields also increase the opportunity cost of holding gold because the precious metal does not generate interest income.
Global Fiscal Pressure Remains in Focus
Investors are also assessing rising fiscal pressure around the world and its potential impact on monetary policy.
In Europe, political uncertainty and fiscal concerns in France have supported demand for the U.S. dollar.
The situation has also pressured European bond markets and pushed the euro to a 17-month low.
Rate-Hike Expectations Decline
ISM data showed that cost pressures in the U.S. services sector increased during the previous month.
The development has kept the possibility of further Federal Reserve tightening in focus.
However, expectations for a near-term rate hike have declined after U.S. employment data came in below expectations.
Markets now estimate around a 20% probability of a rate hike in October, down from around 70% the previous week.
Investors Await FOMC Minutes
The Federal Reserve’s September meeting minutes are scheduled for release in the middle of the week.
Investors will examine the minutes for further clues about the central bank’s future monetary policy.
As a result, movements in the U.S. dollar and Treasury yields remain important factors for gold prices ahead of the FOMC minutes.
