Gold Price Drop
Gold Snaps Three-Session Winning Streak as Stronger U.S. Dollar and Fed Rates Weigh
Anonymous
Key Points
1
Traders were also awaiting U.S. purchasing managers’ index (PMI) data and speeches from several Federal Reserve officials for clues about the path of interest rates.
2
Article 4 reported that the Federal Reserve’s September rate increase was approved unanimously, by a 12-0 vote, raising the benchmark rate to 3.75%-4.00%.
3
The 10-year Treasury yield rose to about 4.97% after the Fed’s move, while futures markets priced in roughly a 60% chance of another 25-basis-point increase before year-end.
4
Technical indicators offered little evidence of strong momentum in gold: the four-hour XAU/USD chart showed a neutral outlook, with both the RSI and MACD signaling weakness.
5
Falling oil prices were linked partly to diplomatic developments involving the Middle East, including possible talks between U.S. President Donald Trump and Iranian President Masoud Pezeshkian, as well as improving energy flows from Saudi Arabia.
Gold snapped a three-day winning streak as the U.S. dollar strengthened and profit-taking pressured prices. Spot gold recently traded around $4,350 to $4,380 an ounce, while Moneycontrol reported futures in India dropped for a fourth consecutive session to Rs 1.5 lakh per 10 grams. The Federal Reserve's unanimous rate increase and elevated Treasury yields around 4.97% reinforced bearish sentiment on the non-yielding asset.
Falling oil prices offered some relief by easing inflation concerns and reducing pressure for prolonged monetary tightening. Trading View noted U.S. equity futures fell sharply, with Treasury yields climbing on an adverse macroeconomic backdrop. Traders now await purchasing managers' index data and Federal Reserve speeches for clues on the path of interest rates before year-end.
Fed Rate Hike Pushes Gold Lower
The Federal Reserve unanimously approved a rate increase, raising the benchmark rate to 3.75%-4.00%, according to Moneycontrol. The 10-year Treasury yield jumped to about 4.97% after the move. Futures markets now price in roughly a 60% chance of another 25-basis-point increase before year-end, weighing heavily on gold's appeal.
Stronger Dollar Extends Gold's Losses
A firmer U.S. dollar remains the primary headwind for gold prices. BERNAMA reported that global strategist Stephen Innes cited the stronger dollar as a key factor driving futures lower on Bursa Malaysia Derivatives. Higher U.S. borrowing costs make dollar-denominated gold more expensive for foreign buyers, dampening demand worldwide.
Moneycontrol noted gold has fallen 8.52% from its monthly peak of $4,658 per ounce, trading to an intraday low of $3,245.60. The weak momentum persists despite some recovery from recent lows. Silver, platinum and palladium managed modest gains, but gold remains under pressure as long as the dollar stays strong.
Energy Weakness Offers Temporary Reprieve
Falling oil prices have provided some support to gold by easing inflation concerns and reducing expectations for sustained monetary tightening. Diplomatic developments in the Middle East, including possible talks between U.S. President Donald Trump and Iranian President Masoud Pezeshkian, along with improving energy flows from Saudi Arabia, have helped lower crude prices and ease upward pressure on rates.
Technical Signals Point to Weakness Ahead
Technical indicators offer little evidence of strong momentum for gold. The four-hour XAU/USD chart shows a neutral outlook, with both the Relative Strength Index and MACD signaling weakness. Gold's direction now hinges on the interplay between Fed policy, the dollar, bond yields, energy costs and geopolitical developments in coming weeks.
Sentiment
Mostly NegativeNEGATIVENEUTRALPOSITIVE
Publishers
23
Articles
62
Reach
85
A
AnonymousAuthor
