GOLD PRICES touched their lowest level since April 2020 on Monday as a strong US Dollar and elevated Treasury yields continued to weigh on bullion.
Spot gold fell to US$1,626.41 per ounce during Asian trading before recovering to approximately US$1,641.59 at 12:06 GMT, according to Reuters.
At that reporting point, US gold futures were down approximately 0.4% at US$1,648.80 per ounce.
The Dollar index reached a fresh high dating back to 2002, supported by a sharp decline in the British Pound. Dollar strength makes US Dollar-priced gold more expensive for buyers using other currencies.
Benchmark US Treasury yields hovered near their highest levels since 2011, increasing the opportunity cost of holding bullion.
The pressure followed the Federal Reserve’s decision on 21 September to raise its benchmark target range to 3.00–3.25%.
The Fed indicated that further increases would likely be appropriate and confirmed that it would continue reducing its securities holdings.
In its statement, the central bank cited elevated inflation, pandemic-related supply and demand imbalances, and higher food and energy prices. It also identified Russia’s war against Ukraine as a source of additional inflation pressure and weaker global economic activity.
Silver also declined on Monday, trading approximately 0.5% lower at US$18.74 per ounce at the Reuters reporting point.
The latest weakness underscores the importance of interest rates and currency movements for precious metals. Economic uncertainty can support demand for defensive assets, but a stronger Dollar and higher yields can exert substantial pressure on gold at the same time.
Disclaimer
This publication is for educational purposes only and does not constitute financial advice. It does not take into account any person’s investment objectives, financial situation or needs. Before making an investment decision, consider whether the information is appropriate to your circumstances and seek advice from a licensed financial adviser where necessary. Past performance is not a reliable indicator of future performance.