Gold prices stabilise after nine-day losing streak as bond yields dent demand
Gold prices have stabilised after a nine-day losing streak which saw the precious metal slide on the spot market amid rising bond yields and a robust US dollar.
The yield on the 30-year US Treasury bond pierced five per cent last week for the first time since 2007, while the prospect of ultra-high interest rates being sustained over the winter and into new year has also weighed down bullion prices.
The possibility of a further interest rate hike has also grown following a robust US jobs data report last week, with the US Labor Department’s data showing a 336,000 increase in jobs in September on a monthly basis, beating industry expectations of around 170,000 new roles opening up in the economy.
Meanwhile the strengthening of the dollar compared to rival currencies has hampered commodities, including even oil during its historic rally last month.
Prices have dropped over $100 per ounce since last month, nosediving from $1,926.25 per ounce on 25 September to $1,812.65 per ounce on 6 October.
Since then there has been a slight recovery, with gold prices climbing back to $1.832.98 per ounce, but prices remain on track for a second straight weekly loss.
Carlo Alberto De Casa, external market analyst at Kinesis Money, argued that the latest drop in prices shows that gold remains trapped in a “bearish scenario”, weighed down by challenging macroeconomic conditions.
“This confirms the high pressure that the precious metals markets are experiencing in the current scenario, with rising yields and a strong dollar,” he said.
Carsten Fritsch, commodity analyst at Commerzbank, said there was a possibility of further price declines amid sell-offs from speculative investors, with contracts for long positions having declined to lows posted during August’s previous slump.
He said: “It is perfectly possible therefore that they will dip below this level. The last time speculative positioning in gold was net short – which is not seen very often – was in November 2022.”