Gold down on two-decade high dollar mark and treasuries soar, with 2-year Treasury yields hitting a 15-year high of 4.266% earlier in the session, supported by fears of an economic slowdown and declines in the broader market following the Federal Reserve’s rate decision Wednesday.
After the third 75-basis-point interest-rate increase in as many Fed meetings, economists are increasingly sounding an alarm about a possible recession. Gold is a traditional hedge against economic uncertainty. But even as the S&P 500 and Dow Jones Industrial Average tumbled again Thursday, a dollar gauge traded near a record high and Treasury yields were close to the highest level in a decade, pressuring gold.
Front-month gold futures rose 0.3% Thursday to settle at $1,681.10 an ounce on Comex, and they dropped 0.1% in the first four days of the week. Bullion lost 3.1% in August after declining 1.4% in July. The metal retreated 3.5% in 2021. Currently, the December contract is down $15.90 (-0.95%) an ounce to $1665.10 and the DG spot price is $1656.80.
Holdings in SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, fell to 30,547,653 ounces, the lowest level since March 2020, Reuters reported.
The Fed on Wednesday boosted its benchmark short-term rate to a range of 3% to 3.25%, the highest level since early 2008, and policymakers forecast that they will continue to increase rates to about 4.4% by the end of the year and keep raising them into 2023 to combat soaring inflation.
Investors are betting there’s a 72.5% chance of a 75-basis-point rate increase at the next meeting of Fed policymakers in early November, with 27.5% projecting a 50-basis-point hike, according the CME FedWatch Tool. The Fed raised rates by 75 basis points each in June, July and now September and has increased rates by 300 basis points so far this year.
The moves come as the Fed and other global central banks work to curb 40-year highs in inflation, which rose again in August from July.
The Bank of England on Thursday raised its benchmark rate by 50 basis points and said that the U.K. may already be in a recession. Inflation in the U.K. was up 9.9% year on year in August, though it dipped slightly from July.
Front-month silver futures gained 0.7% Thursday to settle at $19.62 an ounce on Comex. The December contract advanced 1.2% in the first four days of the week. Silver tumbled 12% last month after slipping 0.8% in July. It retreated 12% in 2021. Silver prices are tied to industrial demand. The December contract is currently down $0.477 (-2.43%) an ounce to $19.140 and the DG spot price is $19.24.
Spot palladium increased 2.8% Thursday to $2,197.50 and is up 2.4% so far this week. Palladium retreated 3.3% in August after rising 9.9% in July. It dropped 22% in 2021. Currently, the DG spot price is down $59.80 an ounce to $2140.00.
Spot platinum retreated 1.5% Thursday to $912.00 an ounce and down 0.5% so far this week. Platinum tumbled 6.1% in August after decreasing 0.3% in July. It fell 9.4% last year. The DG spot price is currently down $34.90 an ounce to $880.10.
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