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Gold prices fall due to rising dollar and bond yields

2018-10-10 12:26 pm | Resource: News | No Views : 271

Gold futures fell on Wednesday as yields on high-yielding bonds rose near their highest level since 2011 and the dollar index was trading slightly higher.

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, and reduces the attractiveness of US gold to investors using other currencies.

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, as well as continue its gradual upward trend in 2019.

US economic adviser Donald Trump said on Wednesday he hoped the arrangement of trade deals with other countries would help bring China to the negotiating table. Washington recently brokered a trade deal with Mexico and Canada to reform the North American Free Trade Agreement (NAFTA) amid the ongoing trade war with Beijing. "China wants to make a deal and I say it's not ready yet," Trump told reporters on Tuesday. "We can not have a one-way street, it must be a two-way street," he said.

The US dollar index was steady around 95.68. This figure remains about 4% higher this year so far, contributing to a nearly 9% decline in gold across the same level.

The 10-year US Treasury yield rose 1.8 basis points to 3.23%.

However, analysts say equity markets are also vulnerable to higher bond yields and any indication of a rapid fall in equity markets could resume interest in gold again.
  • The price of gold fell in December by $ 1.20 or 0.1% to $ 1.190 an ounce, nearing a one-week low of $ 1.118.60 on Monday ahead of a moderate bounce on Tuesday.
  • Silver prices in December fell 2 cents, or 0.2 percent, to $ 14.375 an ounce.

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