Gold Futures Settle Notably Lower

Gold prices fell sharply on Thursday as the dollar extended a recent uptick and bond yields surged higher after the Federal Reserve signaled another interest rate hike by the end of this year.

The dollar index advanced to 105.74 in early New York trading but subsequently pared most of its gains and was hovering around 105.30 a little while ago.

Gold futures for December ended down $27.50 or about 1.4% at $1,939.60 an ounce.

Silver futures for December ended lower by $0.149 at $23.687 an ounce, while Copper futures for December settled lower by $0.0800 at $3.6960 per pound.

“Gold’s kryptonite remains a hawkish Fed that is fueling a bond market selloff. The end of tightening is here for Europe, but higher-for-longer means investors will continue increasing their fixed income exposure,” says Edward Moya, Senior Market Analyst at OANDA.

“Gold will have one last round of weakness here as US growth exceptionalism will keep yields trending higher. The peak in Treasury yields is almost here, but until recession risks become the base case for the US, gold might struggle to stabilize,” he adds.

In U.S. economic ndews, data released by the Labor Department showed initial jobless claims dipped to 201,000 in the week ended September 16th, a decrease of 20,000 from the previous week’s revised level of 221,000.

Economists had expected jobless claims to inch up to 225,000 from the 220,000 originally reported for the previous week.

The Bank of England left its policy rate unchanged at 5.25%, with the bank’s Monetary Policy Committee (MPC) voting 5-4 in favor of holding the policy rate steady.

The BoE decided to hold rates steady for the first time since November 2021 as inflation eased to an 18-month low, while the economy is moving closer to a mild recession. Markets had widely expected a quarter-point hike. At 5.25%, the interest rate is the highest since early 2008.

The Swiss National Bank held rates unchanged earlier today, but warned that more increases may still be needed.

Sweden’s Riksbank has raised borrowing costs by a quarter point and said it might need to do more to bring inflation back to its 2 percent target.

Norway’s central bank raised its benchmark interest rate by 25 basis points and indicated another rate hike in December to curb inflation.

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