On Monday, gold prices experienced a decline influenced by an increase in U.S. Treasury yields. Investors eagerly awaited the release of the minutes from the Federal Reserve's latest meeting to gain insights into the central bank's comments on interest rates and whether the Fed is still inclined to wait or even have one more increase in the Fed Funds rate, which traders think is a low probability event.
As of 2:39 pm EST, spot gold was trading down $2.68, at $1,978.04 per troy ounce. Spot silver traded at $23.48, down 24 cents on the day.
Bart Melek, the Head of Commodity Strategies at TD Securities, commented, "Technically, we've seen gold hit resistance and return to range-bound trading with somewhat higher rates as a catalyst here."
Anticipation surrounded the Federal Reserve's commitment to monetary policy, with an expectation that it would maintain its stance, linking policy decisions to inflation and indicating a willingness to sustain elevated rates as necessary. Should the Fed unexpectedly raise interest rates by another ¼ point, it would likely result in a significant decline in gold. Gold would also likely see the opposite trend should geo-political tension reflare in the Middle East or if economic indicators worsened, leading traders to speculate that not only are interest rate increases in the rear view mirror, but rate cuts might come earlier that currently anticipated.
The release of the Fed meeting minutes is scheduled for Tuesday.
The appeal of non-yielding bullion is enhanced by lower interest rates, exerting downward pressure on the dollar and bond yields.
In a note, analysts at Kitco Metals observed a loss of momentum among precious metals bulls, emphasizing the need for fresh, fundamental reason to resume its ascent. Traders are focusing on every economic data point and trying to front run the Fed regarding the gold price.
Kitco noted that rising U.S. Treasury yields took precedence over a lower U.S. dollar and increased crude oil prices, making gold and silver buyers less eager to buy the precious metals.
The U.S. dollar index (DXY) experienced a 0.34% decline, reaching a more than 2-1/2-month low against a basket of rivals, thereby limiting gold's losses on that day. The DXY is currently trading at 103.46
On Friday, holdings of the SPDR Gold Trust (GLD), the world's largest gold-backed exchange-traded fund, increased by 1.5% over Thursday. Holdings were at 28.4 million ounces.
Dan Barrett is the Chairman of Pacific Precious Metals and the Founder of the Aureus Point-of-Sale system, a software platform made for bullion and coin dealers. He has been investing in physical gold and silver for over 15 years. His prior experience includes being an Analyst for a variety of Banks and Hedge Funds.
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