Gold slipped on Tuesday as surging Treasury yields and a stronger dollar outweighed fading bets on another Federal Reserve rate hike. Despite the pullback, holdings in the SPDR Gold Trust remain close to multi-month highs, suggesting investors are not abandoning the metal.
Gold is trading down 0.3% to $4,125. The metal remains some distance from the highs above $4,600 just a few weeks ago. Separately, spot gold fell 0.5% to $4,120.16 an ounce. Gold Futures declined 0.2% to $4,146.80.
Yields and a firmer dollar weigh on the metal
A fresh breakout in Treasury yields is making life difficult for gold, since higher yields raise the opportunity cost of holding a non-yielding asset. At the same time, the U.S. Dollar Index rose 0.1% to 102.27, making the metal more expensive for buyers using other currencies. Political uncertainty and fiscal concerns in France have pushed the euro to a 17-month low, lifting the greenback toward its strongest levels of the year.
SPDR holdings tell a different story
While price momentum is weak, investor positioning looks steadier. SPDR Gold Trust holdings are still sitting close to their highest levels in months at around 34 million ounces, even as prices have fallen sharply from their recent highs. That divergence reinforces the narrative that the pressure on gold appears to be coming more from the rates side of the equation. Still, resilient holdings do not mean a rebound is imminent, since yields would need to settle before the metal can build a firmer base.
Fading Fed hike bets offer limited support
Gold has fallen more than 6% in September as energy-driven inflation concerns, rate expectations and a stronger dollar weighed on the metal. However, expectations for an immediate hike have eased since last week's weaker-than-expected payrolls report, and ANZ analysts pointed to markets now assigning roughly a 20% chance of an October hike, down from around 70% a week earlier. The minutes of the Fed's September meeting, when policymakers raised rates for the first time in three years, are due midweek and could offer further guidance.
Sources: investingLive, Investing.com
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