gold drops below $2,000 as dollar gains, US yields pare losses

 The dollar’s rise causes gold to plummet under $2.000 as US yields claw back from earlier declines.

On Wednesday, gold prices dropped below psychological $2,000 per Troy once as the greenback recovered strength and the gains of long-term treasuries faded, though Fed’s softening signals restrained gold’s retreat.

Spot gold was down 0.4% at $1,991.16 per ounce by 3: The market is due to make its biggest daily decline in terms of size since November 10, having opened at 05p.m. ET (2005 GMT).ICENSE.” U.S. gold futures closed 0.4 percent down at $1,991.3 per ounce.

The dollar index is rallying to its daily highs, which is limiting some of the buying interest in gold,” said Jim Wyckoff, a senior analyst at Kitco Metals, adding that divergent pressures are keeping the trade steady and holiday type.

A strong initial jobless claims data unsettled the market expecting to see the Fed reduce interest rates around mid-June.

Gold prices normally go up when there are low interest rates because then people have less reason to hold other yield generating assets. In the previous session, bullion rose to $2,007.29, which is a three-week high.

According to Daniel Ghali, commodity strategist at TD securities, “the main driver of the past week’s gold price increases has been the jump in markets’ expectation of Fed coming on board earlier in 2024.”

At their last policy meeting, federal officials said that they would be “careful” and increase interest rates only if inflation progress stalled, released minutes of the Oct. 1 gathering showed.

Spot Silver also declined by 0.4% but to $23.66 per ounce in other metals. Palladium declined about 2 percent falling toward its lowest in a month at almost $1,000. Meanwhile, platinum lost 1.2 percent nearing ten year lows of USD 920 per ounce.

Raja Arslan

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