Gold Rebounds After Three Sessions of Losses
Gold prices climbed more than 1% on Thursday, October 15, and were on track to end a three-session losing streak. The recovery was supported by a weaker US dollar and lower Treasury yields, while expectations of a Federal Reserve rate increase later in October remained subdued despite stronger-than-expected inflation data.
According to Reuters, spot gold rose 1.3% to $4,156.52 per ounce by 9:30 a.m. Eastern Daylight Time, or 1330 GMT. The metal had fallen to a one-week low during the previous session. US gold futures for December delivery gained 1.7% to $4,177.80 per ounce.
The US dollar declined 0.5%, while the benchmark 10-year Treasury yield stood at a three-week low. The combination of a weaker dollar and lower yields supported gold prices during the session.
Investors Assess Inflation and Federal Reserve Policy
The gold rebound came after US inflation data had strengthened expectations of a possible interest-rate increase. However, the market continued to assess whether the Federal Reserve would act on those inflation pressures at its next meeting.
Peter Grant, vice president and senior metals strategist at Zaner Metals, said the market had largely anticipated the producer-price inflation report following the higher-than-expected consumer-price reading released the previous day.
Grant also said investors were beginning to recognize that the Federal Reserve faced constraints because of the fiscal situation and that raising interest rates much further could place a substantial burden on the economy.
Dollar and Bond Yields Remain Key Market Factors
Gold is priced in US dollars, so movements in the currency can affect its cost for buyers using other currencies. A weaker dollar can make gold less expensive for those buyers. Gold also does not pay interest, making changes in bond yields relevant to how investors compare the metal with interest-bearing assets.
In the reported session, the decline in the dollar and the lower 10-year Treasury yield coincided with the rise in gold prices. The report described the metal’s movement during Thursday’s trading session; the quoted figures are not the final closing prices for Friday, October 16.
