Gold under pressure from elevated US dollar, bond yields

Gold prices eased on Tuesday as the dollar benefited from elevated bond yields and China’s economic concerns, with markets now looking ahead to US retail sales data that could shed light on the impact of higher rates on consumer spending.

Spot gold was down 0.2% at $1,905 per ounce by 0319 GMT, trading near its lowest level in 1-1/2 months hit in the previous session.

US gold futures dropped 0.3% to $1,937.80. Gold prices fell as the US dollar and Treasury yields were pushed higher, with investors assessing potential policy actions from Chinese regulators to address mounting financial and property risk, according to NAB Commodities Research.

Making bullion expensive for overseas buyers, the US dollar hit its highest levels in more than a month on Monday amid worries over China’s economy. US 10-year Treasury yields were near their highest levels since November.

Higher dollar, yields drag gold to more than one-month low

China’s central bank unexpectedly cut key policy rates on Tuesday, as the world’s second-biggest economy’s industrial output and retail sales growth slowed and undershot forecasts.

Attention is now turning to US retail sales data due later in the day and the Federal Reserve’s July policy meeting minutes on Wednesday.

Sabrin Chowdhury, head of commodities at BMI, expects a boost in gold prices, lately under pressure from a strong US dollar, only towards the last quarter of 2023.

“While the US Fed’s hiking cycle has reached its apex with the hike in July 2023… we expect a dovish pivot to only appear from 2024 onwards.”

Treasury Secretary Janet Yellen said President Joe Biden’s policies are powering historic job growth and rebuilding competitiveness, despite polls showing Americans remain sceptical.

Highlighting investor sentiment toward bullion, the world’s largest gold-backed exchange-traded fund, SPDR Gold Trust, said its holdings fell 0.4% to their lowest since January 2020 on Monday.

Spot silver was up 0.1% to $22.63 an ounce and platinum fell 0.3% to $898.94. Palladium slid 0.5% to $1,262.76.