Gold hits 7-month low at the start of 2023’s Q4

Gold is falling with bonds, equity, and commodity prices as expectations for US interest rates rose after the US government struck a deal with Republican opponents to avert a shutdown until the middle of next month.

US President Joe Biden signed a bill to extend government funding for 6 weeks, but without any additional funding for sending arms or aid to Ukraine, already costing $75 billion and a source of outrage among hard-right Republicans.

The market will price in a greater chance of a November hike, which will mean more pressure at the front-end of the curve. Positioning in Fed Fund futures contracts jumped to price the odds of an interest-rate rise next month at 28% from the 18% seen before the weekend’s deal. Major government bond prices fell again, pushing up bond yields to fresh 2007 highs on most US Treasury debt, including the 10-year bond.

The Dollar index also rose, up 0.3% by lunch time in London and extending last week’s 3.1% leap, the 11th weekly rise in a row. Gold prices in the US Dollar fell 0.7% Monday morning to $1835 per ounce, the lowest since early March.