Weekly Gold Price Decline
Gold Heads for Weekly Loss as Stronger Dollar and Treasury Yields Weigh Heavily
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Key Points
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Gold had fallen about 20% or more since the U.S.-Israeli war with Iran began in late February, as markets worried conflict-driven inflation could keep interest rates higher for longer.
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The Federal Reserve raised its benchmark rate by 25 basis points the previous month, its first increase in three years, while policymakers remained divided over whether another hike was needed.
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Saxo Bank strategist Ole Hansen said investors were balancing the rising opportunity cost of holding gold against concern that elevated yields, alongside heavy government debt burdens, could eventually “cause something to break.”
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Other precious metals rose on Friday: silver gained 0.6%, platinum 0.7% and palladium 1.7%, although all three were also poised to post weekly losses.
Gold is headed for its second straight weekly loss as a stronger U.S. dollar and rising Treasury yields make holding the metal more expensive. Spot gold fell 0.8% to $4,145.68 per ounce on Friday, leaving it down roughly 2% to 3% for the week, according to Kitco. A weak September jobs report initially lifted gold prices over 1%, but the gains evaporated as investors reassessed expectations for Federal Reserve rate moves.
Weak Jobs Data Sparks Brief Rally
The Labor Department reported that nonfarm payrolls grew by just 29,000 in September, far below forecasts. This unexpectedly weak jobs report initially pushed gold up over 1% as traders bet the Federal Reserve might skip an October rate hike. But the rally didn't last long, according to BigGo Finance.
Gold later reversed course and fell in afternoon trading. Investors remained uncertain about the Fed's next move despite the soft employment data. The metal's gains couldn't withstand pressure from the surging dollar and elevated yields, which raise the opportunity cost of owning gold that produces no interest income.
Dollar Strength and High Yields Dominate
A stronger U.S. dollar and high Treasury yields are the main culprits crushing gold prices. When the dollar rises, foreign investors need more of their own currency to buy gold, which dampens demand. Meanwhile, elevated yields on Treasury bonds offer an attractive alternative to gold, which doesn't pay interest, according to Kitco.
Saxo Bank strategist Ole Hansen said investors are weighing the rising cost of holding gold against worries that high yields combined with heavy government debt could eventually "cause something to break." This tension between growth concerns and inflation fears keeps gold under pressure heading into potential Fed decisions.
Gold's Steep Decline Since February Conflict
Gold has plunged roughly 20% or more since the U.S.-Israeli conflict with Iran began in late February. Markets worried that conflict-driven inflation could force central banks to keep interest rates elevated for longer periods. The Federal Reserve already raised its benchmark rate by 25 basis points last month, marking its first increase in three years.
Other precious metals showed mixed signals on Friday. Silver gained 0.6%, platinum rose 0.7%, and palladium climbed 1.7%, according to Market Screener. However, all three metals remain on track for weekly losses alongside gold, reflecting broader pressure across the precious metals complex.
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