Gold prices decline as strengthening U.S. dollar and rising treasury yields impact market

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26th September 2023 – (Hong Kong) Gold futures on the COMEX division of the New York Mercantile Exchange experienced a decline on Monday, primarily driven by the strengthening of the U.S. dollar. The most active gold contract for December delivery dropped by 0.46 per cent, or $9, to settle at $1,936.60 per ounce.

The rise in U.S. Treasury yields further contributed to the dampening of gold prices. As yields increase, the opportunity cost of holding non-yielding assets like gold becomes relatively higher, thereby reducing the appeal of the precious metal.

The resilient state of the U.S. economy continues to exert pressure on gold. The limited upside potential for gold prices is primarily attributed to the hawkish stance maintained by Federal Reserve policymakers in preparation for upcoming monetary policy meetings.

Investors are closely monitoring the likelihood of a rate hike at the next Federal Open Market Committee meeting scheduled for November. Additionally, they await the release of the U.S. gross domestic product (GDP) report, which is scheduled for Thursday. The GDP report is expected to provide further insights into the state of the U.S. economy and potentially influence future monetary policy decisions.

In line with the decline in gold, silver futures for December delivery also experienced a downturn. Silver fell by 1.93 per cent, or 45.90 cents, to close at $23.385 per ounce. Similarly, platinum futures for October delivery declined by 1.78 per cent, or $16.60, settling at $917.50 per ounce.