Gold firms as U.S. dollar, bond yields fall

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Gold prices rose on Thursday, as the U.S. dollar and Treasury yields fell on mounting expectations of slower monetary policy tightening by the Federal Reserve later in the year.

FUNDAMENTALS


* Spot gold rose 0.3% to $1,669.16 per ounce by 0116 GMT, after hitting a two-week high on Wednesday.

* U.S. gold futures were up 0.3% at $1,673.30.

* The dollar index was little changed after hitting its lowest level since Sept. 20 earlier. A weaker dollar makes greenback-priced gold less expensive for overseas buyers.

* Benchmark U.S. 10-year Treasury yields slid further away from multi-year peak touched last week.

* Report from Commerce Department on Wednesday showed sales of new U.S. single-family homes dropped in September and data for the prior month was revised lower, supporting the view that Fed rate increases are already working.

* The U.S. central bank is widely expected to announce a fourth straight 75 basis-point interest rate increase at the end of their Nov. 1-2 policy meet.

* Gold is highly sensitive to rising U.S. interest rates, as these increase the opportunity cost of holding non-yielding bullion, while boosting the dollar, in which it is priced.

* The European Central Bank will raise interest rates again on Thursday and likely reel in a key subsidy to commercial banks, taking another huge step in tightening policy to fight surging inflation.

* International Monetary Fund chief Kristalina Georgieva said on Wednesday that central banks should keep raising interest rates further to fight inflation until they hit a “neutral” level, though in most cases they have not reached this point.

* Spot silver was little changed at $19.61 per ounce, platinum rose 0.1% to $952.62 and palladium gained 0.8% to $1,979.30.

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