Gold Slides to Near 7-Month Low as U.S. Bond Yields Rise Amid W

Aminan Updated   
TVC:GOLD   CFDs on Gold (US$ / OZ)
Gold dropped to a nearly 7-month low on Thursday as traders pushed prices below the key $1,800 per ounce level, breaking decisively from the $1,900/ounce support that had held in the previous session.

The most active gold futures contract on New York's Comex, December, settled at $1,878.60 per ounce, down $12.30 or 0.6%. Comex gold has lost nearly 2% in value in just 48 hours after taking almost 5 weeks to achieve this since mid-August. The lowest point for December gold on Thursday was $1,874.55, a level unseen on Comex's most actively traded contract since March.

Spot gold, which some traders watch more closely than futures, was at $1,866.97 at 16:00 ET (20:00 GMT), down $8.15 or 0.4%. It had plunged to as low as $1,857.74 earlier, also the lowest since March.

Bond Market Weighs Heavily on Gold

Ed Moya, an analyst at online trading platform OANDA, said, "The bond market has killed any hopes of a short-term recovery in gold." "Gold was thought to have found a bottom, but concerns over rising bond yields have made precious metal traders wary that the selloff may not be over. Bond market developments are making the yield curve noticeably steeper, which is bad news for gold."

Surging U.S. Bond Yields

The U.S. Treasury bond yield, compared to the U.S. 10-year yield, rose to its highest level in 16 years on Thursday, on expectations that the Federal Reserve will raise rates more aggressively. Bond market selling continues even as the U.S. dollar retreated from its highest level since November.

Outlook for Gold

Moya added, "Gold's drop below $1,900 opened up a technical selling opportunity targeting the $1,870 area." "If global bond yields continue to rise despite expectations of falling inflation, the current market positioning may allow gold to plummet to the $1,800 region."

Fed's Interest Rate Situation

Federal Reserve Chair Jerome Powell said in a press conference last week that energy-related inflation is a bigger concern for the central bank. Oil prices hit a year-long high in Thursday's trading before retreating.

The Fed has hiked rates 11 times from March 2022 to July 2023, adding a total of 5.25 percentage points to the previous baseline rate of just 0.25%. Another quarter-point hike is possible in November or December, with more likely in 2024.
The market is still trending in the right direction !
The market is moving in the right direction and confirming previous calculations

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