Gold Futures Settle Lower As Dollar Rises On Interest Rate Bets

Gold prices fell to more than 6-month lows on Monday, weighed down by a stronger dollar and higher bond yields amid bets the Federal Reserve will hold interest rates higher for longer to fight inflation.

The dollar index surged to 106.94, gaining nearly 0.7%.

Gold futures for December ended lower by $18.90 at $1,847.20 an ounce.

Silver futures for December ended down $1.029 at $21.421 an ounce, while Copper futures for December settled at $3.6415 per pound, down $0.0960 from the previous close.

“Gold prices continue to soften as Wall Street prepares for even higher real rates. A peak in the dollar remains elusive as Treasury yields can’t stop rising. A lot of gloom is coming towards the US consumer but that won’t lead to safe-haven flows for bullion until the bond market selloff is believed to be over,” says Edward Moya, Senior Market Analyst at OANDA.

“Gold is vulnerable to breaking below $1800 if investors start to anticipate the 10-year Treasury is ready to test the 5.00% region,” Moya adds.

In U.S. economic news, the Institute for Supply Management released a report on Monday showing a modest slowdown in the pace of contraction in U.S. manufacturing activity in the month of September.

The ISM said its manufacturing PMI rose to 49.0 in September from 47.6 in August, although a reading below 50 still indicates a contraction. Economists had expected the index to inch up to 47.7.

“The U.S. manufacturing sector continued its contraction trend but at a slower rate, recording its best performance since November 2022, when the PMI also registered 49 percent,” said Timothy R. Fiore, Chair of the ISM Manufacturing Business Survey Committee.

He added, “Companies are still managing outputs appropriately as order softness continues, but the month-over-month PMI improvement in September is a clear positive.”

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