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Gold retreats on comeback in US dollar, yields

October 5, 2022By Reuters

Oct 5 (Reuters) – Gold prices slipped more than 1% on Wednesday, weighed down by a jump in the dollar and US Treasury yields in the run up to US jobs data that could influence the Federal Reserve’s rate hike path.

Spot gold was down 0.8% at USD 1,712.93 per ounce by 1:52 p.m. ET (1752 GMT), after hitting a three-week peak at USD 1,729.39 on Tuesday.

US gold futures settled 0.6% lower at USD 1,720.80 per ounce.

“We’re seeing a resurgence in the dollar and yields, as a result, we’ve seen a pullback in gold after a pretty aggressive move higher over the course of the last several sessions,” said David Meger, director of metals trading at High Ridge Futures.

Making gold less appealing for other currency holders, the dollar gained over 1% against its rivals, after posting its worst day since March 2020 on Tuesday. Benchmark US 10-year Treasury yields US10YT=RR also climbed.

Data showed US private employers stepped up hiring in September, suggesting demand for workers remains strong despite rising interest rates and tighter financial conditions.

Focus now shifts to the US Labor Department’s closely watched nonfarm payrolls data for September on Friday.

“The Fed is very much focused on the jobs market right now. We’ve seen little hints as to slowdown in manufacturing. However, if we do see a better-than-expected jobs number, that may be disappointing to the gold market,” Meger said.

Gold is highly sensitive to rising US interest rates, as these increase the opportunity cost of holding non-yielding bullion.

Spot silver dropped 2.7% to USD 20.54 per ounce, after rising to a three-month peak in the previous session.

“Silver had previously been significantly undervalued vis-à-vis gold. Its undervaluation now is no longer so pronounced,” Commerzbank analysts said in a note.

Platinum fell 1.5% to USD 915.97 per ounce, and palladium dipped 2.8% to USD 2,250.67.

(Reporting by Brijesh Patel in Bengaluru; Additional reporting by Bharat Govind Gautam; Editing by Maju Samuel and Krishna Chandra Eluri)


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