Gold pushed lower below $1900, on higher rate bets, soaring T-yields

On the background of accelerating interest rate bets and amid skyrocketing Treasury yields, as well as the Federal Reserve’s conviction that interest rates will stay high for a considerable amount of time, gold prices have declined around $1900. At the time of writing, the precious metal is trading at $1899.90 per ounce. Real yields are represented by the US 10-year TIPS yield, which recently hit a 14-year high of 2.236%, last seen in July 2009.

Gold prices have been further impacted by this development as the US Dollar Index, which measures how well six different currencies do versus the US Dollar, has also increased, reaching 106.17, up 0.21% from its previous all-time high of 106.20. With XAU/USD trading at $1901.16, a decrease of 0.76%, traders are preparing for prolonged high interest rates.

In contrast to rising US bond yields, Wall Street is currently trading in the red. A proxy for real yields, the US 10-year TIPS yield, has risen to levels not seen since July 2009, a fresh fourteen-year high of 2.236%. The US Dollar Index has also climbed to 106.17, up 0.21%, after hitting a new year-to-date high of 106.20.

Consumer confidence dropped to a four-month low, according to the Conference Board, with the measure falling to 103 from 108.7 in August. The general economy’s declining economic outlook is to blame for this decline. Housing data revealed that August’s Building Permits in the US increased from July’s 1.443 million to 1.541 million, indicating continued growth in construction. However, the housing market shows signs of weakness, with New Home Sales plummeting by -8.7% compared to the 8% increase in July.

Durable Goods Orders, Initial Jobless Claims, GDP, the Fed’s inflation indicator, and the core PCE will all be released along with Fed speakers on the US economic docket. According to the XAU/USD daily chart, gold is expected to continue to decline. It may challenge the cycle low from August 21 at $1884.89 or recapture the high from September 20 at $1947.39.