The price of gold fell by about 1.2%, continuing its downward movement and reaching its lowest level since September 18. The catalysts for the fall in prices were the rally of the US currency and the rise in US Treasury yields.
The US Dollar Currency Index (DXY), which tracks the dynamics of the dollar against six currencies (euro, swiss franc, yen, canadian dollar, pound sterling and swedish krona) rose by 0.23% to 106.73, making gold more expensive for overseas buyers. Since the beginning of the month, the index has jumped 2.65% after rising 3.18% in October. Meanwhile, the yield on 10-year US Treasury bonds increased by 1.6 basis points to 4.467% (the highest value since July 2).
Prices also continued to be impacted by yesterday's US inflation data, which was in line with forecasts and signaled that the Fed was likely to continue easing monetary policy at its December meeting. However, the outlook for next year has become less certain, given expectations of higher inflation, which will make it difficult for the Fed to reduce interest rates. Fed officials also remain cautious about future rate cuts, citing potential risks to inflation. Gold is considered a hedge against inflation, but higher interest rates dampen the appeal of holding the non-yielding asset.
Today, investors will focus on U.S. producer price data and the weekly report on initial jobless claims, as well as comments from Fed Chair Jerome Powell. According to the CME FedWatch Tool, markets see a 82.5% probability of a 0.25% rate cut in December (compared to 66.6% a week earlier).