Gold Prices Decline as U.S. Interest Rate Cut Expectations Ease

Gold prices retreated as traders scaled back their expectations for a U.S. Federal Reserve rate cut, following stronger-than-expected U.S. jobs data. Bullion was trading near $2,643 per ounce, still close to its record high of $2,685.58, which it reached late last month.

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U.S. Treasury Yields
Gold’s Performance
Market Trends
Market Analysis

Details

U.S. Treasury yields returned to 4% after Friday’s robust jobs report dampened the chances of a significant rate cut by the Federal Reserve in November. Money markets are now pricing in a rate reduction of less than a quarter-point next month.

Lower interest rates are often seen as supportive for non-yielding gold. Upcoming U.S. inflation data, expected later this week, could provide further insight into the trajectory of interest rates.

Additionally, Federal Reserve officials, including Alberto Musalem, are scheduled to speak at various events later on Monday.

U.S. Treasury Yields

Impact of U.S. Treasury Yields on Gold Prices

Gold prices were directly impacted by the return of U.S. Treasury yields to the 4% level, which led to a decline in gold’s positive momentum. The reduced expectations of a rate cut contributed to the rise in bond yields, negatively affecting gold.

Gold’s Performance

Gold’s Performance This Year and Support from Central Banks

Gold has surged by approximately 28% this year, marking a series of record highs, fueled by optimism surrounding interest rate cuts. The precious metal has also been supported by strong buying from central banks and demand for a safe haven amid ongoing conflicts in Ukraine and the Middle East.

Market Trends

Fund Managers’ Positions in the Gold Market

At the same time, fund managers reduced their net bullish positions on gold to the lowest level in three weeks as of October 1, according to data from the Commodity Futures Trading Commission (CFTC) released on Friday. This decline reflects investors’ concerns about market volatility.

Market Analysis

Market Analysis and the Performance of Other Metals

Ole Hansen, head of commodity strategy at Saxo Bank, wrote in a note: “Gold and silver markets have experienced net selling as traders locked in profits amid signs of exhaustion in the rally of both metals.” He added: “In gold, both long and short positions were reduced as short sellers became wary of price increases driven by geopolitical tensions, while long positions continued to take profits.”

Spot gold fell 0.4% to $2,642.88 per ounce as of 4:22 p.m. in New York. The Bloomberg Dollar Spot Index held steady, while the yield on 10-year U.S. Treasuries rose. Palladium prices increased, while platinum and silver prices declined.

Gold Prices Decline as U.S. Interest Rate Cut Expectations Ease

Gold Prices Decline as U.S. Interest Rate Cut Expectations Ease

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