Gold Extends Losses
Gold Extends Its Decline After US Inflation Data
Gold prices fell by more than 1% on Wednesday. The decline extended losses for a third consecutive session. Stronger-than-expected US inflation data increased expectations that the Federal Reserve could raise interest rates later in October.
According to the Reuters report published by Business Recorder, spot gold declined 1.6% to $4,091.06 per ounce by 11:30 a.m. Eastern Daylight Time, or 1530 GMT. This was its lowest price since October 7. Meanwhile, US gold futures for December delivery fell 1.5% to $4,112.90 per ounce.
The decline followed US inflation data that strengthened expectations of tighter monetary policy. Higher interest-rate expectations can weigh on gold-market sentiment. This happens as investors reassess the relative appeal of assets that do not pay interest.
A Stronger Dollar and Higher Treasury Yields Add Pressure
The US dollar index rose 0.7% after the inflation report reinforced expectations of a possible Federal Reserve rate increase. A stronger dollar makes gold priced in dollars more expensive for buyers using other currencies. As a result, gold may become less attractive to some international buyers.
US Treasury yields also rose, adding another source of pressure on the precious metal. Consequently, gold prices moved lower amid a stronger US currency and higher market expectations for interest rates. These factors contributed to the pressure on gold during Wednesday’s trading session.
David Meger, director of metals trading at High Ridge Futures, said the inflation reading suggested that the Federal Reserve was more likely to raise rates. His assessment referred to consumer-price inflation remaining above the central bank’s target.
The report described gold’s third consecutive session of losses following the stronger inflation reading. The decline highlighted how inflation data can influence expectations for monetary policy and affect gold-market sentiment. However, the reported price figures reflect trading during Wednesday’s session. They should not be interpreted as the closing price for Thursday, October 15.
