Gold Retreats from Recent High as Dollar Bounces Back
Gold Bulls Face Dollar Resistance
Investors in gold were reminded once again that the dollar is a tough opponent to beat. Despite concerns about rate hikes and inflation, the dollar rallied on Thursday, erasing its losses from the previous three sessions and more.
Gold’s Sprint Comes to a Halt
With the dollar gaining strength, gold’s impressive four-day rally came to an end. The precious metal reached a new two-week high, just shy of $1,900 an ounce, before retracing its gains.
Settlement and Spot Prices
The most-active gold contract for December settled down 0.2% at $1,883 per ounce after reaching a peak of $1,897.90. The spot price, which is closely watched by traders, was at $1,869.65, down 0.3% on the day.
Dollar’s Resurgence
The dollar, measured against six other currencies, showed strength with a 0.6% gain on the day. This recovery came after a downtrend over the past three days, following a 11-month high last week.
US Inflation and Bond Market Selloff
Surprisingly, the dollar rose despite concerns about US inflation, which has been higher than expected for three consecutive months. The September inflation rate grew by an annual rate of 3.7%, surpassing Wall Street economists’ forecast of 3.6%. This hot inflation report triggered profit-taking in the gold market.
Rising Bond Yields
The dollar also benefited from a surge in US bond yields, which recorded their highest increase since July. Yields climbed 2.46% on the day, reaching 4.708%. However, it’s worth noting that yields had been on a downward trend after hitting a 16-year high last week.
Overall, gold’s retreat can be attributed to the dollar’s unexpected resurgence and the bond market selloff. Additionally, the hot US inflation report added further pressure on gold prices. Investors will closely monitor these factors to determine the future direction of gold.
