Gold hovers near 6-month low as dollar soars

September 28, 2023 (MLN): International spot gold is hovering around a six-month low after dropping as much as 1.36% in yesterday's trading session as the dollar reached 10-month highs amid soaring U.S. bond yields.

International spot gold is currently trading at $1,875.1, up by 0.04% compared to the previous close.

Data on Wednesday showed orders for long-lasting U.S. manufactured goods rose in August and business spending on equipment appeared to regain momentum, as Reuters reported.

“Durable goods (figures) were higher than expected that is why the 10-year (Treasury yield) was higher, that’s why the dollar also moved higher, and that’s why we saw selling pressure for gold,” said Hugo Pascal, a precious metals trader at improved.

The dollar hit a 10-month high against its major peers, while Treasury yields climbed a fresh 16-year peak as investors bet the U.S. economy will outperform its competitors in an environment of high-interest rates.

Minneapolis Fed President Neel Kashkari said on Wednesday it is not clear yet whether the U.S. central bank is done raising rates amid ample evidence of ongoing economic strength.

Higher rates raise the opportunity cost of holding bullion, which is priced in dollars and does not yield any interest.

Market focus now turns to the revised U.S. GDP growth rate for the second quarter and weekly jobless claims due later in the day, with the August personal consumption expenditures (PCE) price index, the Fed’s preferred inflation gauge, due on Friday.

Meanwhile, top congressional Republican Kevin McCarthy on Wednesday rejected a stopgap funding bill, bringing closer the fourth partial U.S. government shutdown in a decade.

Meanwhile international spot silver is currently trading at $22.46, down by 0.33% on the day.

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