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Gold is falling with a focus on rising dollar prices

2018-10-08 01:14 pm | Resource: News | No Views : 239

Gold futures fell on Monday, leaving the market heading for a third decline in the past four sessions as Treasury yields remained high and the main dollar index rose.

 Despite volatile price action in recent sessions, Friday's gains were enough to lift the metal nearly 0.8% last week

Ten-year Treasury yields closed last week near 3.23%, away from last week's highs but still hovering near a multi-year high. US bond markets were closed on Monday for the Columbus Day holiday.

Since precious metals - usually used as a haven for investors - do not provide a return, the commodity is vulnerable to a downturn in a high-rate environment. This climate also tends to raise the dollar, where gold is priced in the first place. The Federal Reserve has already raised interest rates three times in 2018 and is expected to raise benchmark interest rates for the fourth time in December, moves that could drive risk-free Treasury yields higher and reduce the appetite of the yellow metal.

A negative reaction to gold may signal higher returns than competing assets to a turning point, however, as some analysts suggest, which means that eventual fears that rising rates may sink stockpiles or the economy may revive interest in tight assets.

"The strength of the dollar is clearly a key factor in the price of gold, with negative correlation, but with rising Treasury yields, there is an additional fear factor in the market that means gold is getting a degree of safe haven offers too. In Hantec, this may help restrict the sale of gold.

Investors were also watching developments in Europe. The European Union, in a letter on Friday to Italian Economy Minister Giovanni Treya, pointed out that Italy's budget targets were a concern for the trade bloc, posing a potential clash of market turmoil, support for gold.
  • The price of gold fell in December by $ 8.30 or 0.7% to $ 1.197.40 an ounce.
  • Silver futures for December delivery fell 12 cents, or 0.9%, to $ 14.52 an ounce early on Monday, after a weekly loss of about 0.4%.

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