The bond yields and the US dollar have an impact on the gold market. However, most significantly, gold is negatively affected by the sell-off in US bonds, causing the dollar to rise as investors chase yields.
Bond yields, compared to the yield on the 10-year US Treasury bond, fluctuated below 4.58 on Friday after reaching a 16-year high of nearly 4.69 on Thursday.
Gold is under pressure here despite the calm in the bond market as investors return to stocks. Real yields are not expected to decrease soon, which continues to be a concern for gold.
The Dollar Index remains steady around 106, adding weight to gold, after reaching a 10-month high of 106.84 on Wednesday.
The dollar is rising despite the latest inflation data, raising hopes that the Federal Reserve may extend the interest rate hold at the November policy meeting. The Personal Consumption Expenditures (PCE) index, a closely watched price gauge by the Fed, increased by 0.4% last month, slightly below Wall Street's expectations of a 0.5% increase.
In the near term, traders should keep an eye on the following factors:
Interest Rates and Bonds: Monitor the interest rate situation and the US bond market. Interest rate fluctuations can impact the price of gold.
Dollar Index: Keep a close watch on the US Dollar Index, as gold often has an inverse relationship with the US dollar. A stronger dollar can lead to lower gold prices.
Inflation Data: The increase in inflation can influence the Federal Reserve's decisions on interest rates. Keep an eye on inflation data to understand its impact on the gold market.
Bond and Stock Market Conditions: Assess the overall conditions in the bond and stock markets. The shift between these asset classes can affect investment decisions in gold.
In these dynamic markets, staying informed about these factors can lead to more informed trading decisions.
Bond yields, compared to the yield on the 10-year US Treasury bond, fluctuated below 4.58 on Friday after reaching a 16-year high of nearly 4.69 on Thursday.
Gold is under pressure here despite the calm in the bond market as investors return to stocks. Real yields are not expected to decrease soon, which continues to be a concern for gold.
The Dollar Index remains steady around 106, adding weight to gold, after reaching a 10-month high of 106.84 on Wednesday.
The dollar is rising despite the latest inflation data, raising hopes that the Federal Reserve may extend the interest rate hold at the November policy meeting. The Personal Consumption Expenditures (PCE) index, a closely watched price gauge by the Fed, increased by 0.4% last month, slightly below Wall Street's expectations of a 0.5% increase.
In the near term, traders should keep an eye on the following factors:
Interest Rates and Bonds: Monitor the interest rate situation and the US bond market. Interest rate fluctuations can impact the price of gold.
Dollar Index: Keep a close watch on the US Dollar Index, as gold often has an inverse relationship with the US dollar. A stronger dollar can lead to lower gold prices.
Inflation Data: The increase in inflation can influence the Federal Reserve's decisions on interest rates. Keep an eye on inflation data to understand its impact on the gold market.
Bond and Stock Market Conditions: Assess the overall conditions in the bond and stock markets. The shift between these asset classes can affect investment decisions in gold.
In these dynamic markets, staying informed about these factors can lead to more informed trading decisions.
