Gold fell $25.5 on strong dollar, bond yields rose

Reporters reported that New York gold futures closed on Friday (September 23), hitting their lowest level in more than two years, weighed down by the appreciation of the dollar against various currencies. and short-term bond yields rose amid expectations that the Federal Reserve (Fed) will continue to raise interest rates to curb inflation. and could cause the economy to go into recession.

Gold contract on COMEX (Commodity Exchange) to be introduced in December. It fell $25.5, or 1.52%, at $1,655.6/ounce. This is the lowest closing level since early April. 2020 and fell 1.7 percent this week.

The silver metal contract for delivery in December fell 70.7 cents, or 3.6 percent, at $18.91 an ounce.

Platinum contract delivered in October. It fell $47.3, or 5.22%, to close at $858.7 an ounce.

Palladium contract delivered in December fell $104.50, or 4.8%, to close at $2,070.50 an ounce.

Dollar strength weighed on gold contracts. and the rebound in US government bond yields Amidst the prospect of the Fed continuing to raise interest rates to curb inflation

A stronger dollar will reduce the attractiveness of gold. by making gold contracts more expensive for holders of other currencies. As the rebound in US Treasury yields increases the opportunity cost of holding gold. Because gold is an asset that does not return in the form of interest.

The two-year US Treasury yield, which is sensitive to the Fed’s monetary policy, rose above 4.2 percent on Friday, surpassing the 10-year and 30-year US Treasury yields.

Short-term bond yields rebounded higher than long-term. As a result, the US bond market has an inverted yield curve, which is a sign of recession.

However, the Fed voted to raise the short-term interest rate by 0.75% to 3.00-3.25% at its latest meeting. He also noted that the Fed will continue to raise interest rates until it reaches 4.6% in 2023.

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