Gold extends decline as dollar gains upper hand

Sept 6 – Gold extended its retreat to a fifth day on Wednesday as yields climbed and bets for higher-for-longer US interest rates and global growth concerns continued to drive safe-haven flows into the dollar.

Spot gold fell 0.4% to USD 1,917.50 per ounce by 1:53 p.m. EDT (1753 GMT), its lowest since Aug. 29. US gold futures settled 0.4% lower at USD 1,944.20.

The dollar held near a six-month peak, while benchmark 10-year Treasury yields were near Aug. 23 highs.

A rise in the safe-haven rival dollar makes gold more expensive for overseas investors, while higher yields decrease non-yielding bullion’s appeal.

Gold’s move is not dramatic, it’s a wait-and-watch to see “what the FOMC is going to do and also if the global economy is going to slip into recession or not,” said Chris Gaffney, president at EverBank World Markets.

Markets were all but certain that the Fed will keep rates unchanged at its Sept. 19-20 meeting, but still bet on a 43% chance of a hike before 2024, according to CME’s FedWatch tool.

The resilience of the US economy, especially the labor market, will allow the Fed to continue to raise rates, especially after OPEC did not do any favors by extending their voluntary production cuts, said Gaffney.

Fed Governor Christopher Waller said on Tuesday the latest round of economic data was giving the US central bank space to see if it needs to raise rates again.

“A lot will also depend over the next few months on how China’s economy holds up, in particular, appetite for jewelry, which really goes hand in hand with consumer confidence,” said Edward Gardner, commodities economist at Capital Economics.

Silver dropped 1.6% to USD 23.17 per ounce, platinum fell 1.8% to USD 909.80. Both slid to over two-week lows.

Palladium was little changed at USD 1,212.88, after hitting its lowest since late 2018 earlier in the session.

(Reporting by Harshit Verma in Bengaluru; Editing by Andrea Ricci, Richard Chang, and Sandra Maler)