Gold Retreats on Stronger US Dollar, Surging T-Yields

On Thursday, the price of gold fell again, giving up some of its previous gains. The US dollar strengthened and US Treasury yields increased throughout this decline. The market’s change was influenced by the Federal Reserve’s decision on monetary policy on Wednesday.

Even if the Fed recognized a robust economy and a contracting labour market, inflation is still a cause for concern even though it has decreased from its peak. Fed still needs more evidence that inflation would not surge again.

The Federal Reserve restated its intention to lower interest rates three times in 2024, provided that statistics support inflationary trends. The demand for gold, which is frequently viewed as a safe-haven asset in times of economic uncertainty, decreased as a result of this news, higher Treasury yields, and a stronger dollar.

From record highs of $2,223 to around $2,200, the price of spot gold dropped at the time of writing to $2182.10, down 0.20%. Gold futures are trading at $2185.4, up 1.13%. The price of gold is seen under pressure from the stronger US dollar and rising Treasury yields. Although it acknowledged the resilience of the economy, the US central bank is nevertheless wary of inflation. The Fed stuck to its three rate-cutting plan for 2024, subject to data.

Market Drivers:
The yield on the US 10-year Treasury recovered from yesterday’s losses. Over 0.5 percent was earned by the US Dollar Index.

Regarding the data, the Initial Jobless Claims data indicated a little improvement over the forecast. Sales of existing homes increased dramatically over the prior month.

Technically, gold’s failure to hold above $2,200 has exposed potential further losses towards $2,146. Gold may test $2,223—its all-time high—if it breaks above $2,200.