Gold prices declined during trading on Tuesday, October 6, pressured by a rising dollar and US Treasury yields, but losses remained limited due to reduced expectations that the Federal Reserve will raise interest rates this month.
In trading, the spot price of gold fell by about 0.4% to $4,122.87 per ounce, while the price of futures contracts for the yellow metal also fell by about 0.2%, recording $4,149.50 per ounce.
The dollar held onto its gains, increasing the cost of the metal priced in US dollars for holders of other currencies.
Yields on 10-year and 30-year U.S. Treasury bonds hit their highest levels in 24 years on Monday as the recent negative sentiment in the bond market continued.
Kyle Rodda, senior financial markets analyst at Capital.com, said in a note quoted by Reuters: “The fundamentals remain supportive for gold in the long term, and the next major catalyst is likely to stem from geopolitical risks in the Middle East.”
The alternative added that any substantial change in US interest rate expectations could provide a boost for a new upward breakout, and therefore all price data will be important.
Expectations for an interest rate hike in the US in October have diminished after data released on Friday showed US job growth slowed more than expected in September, and non-farm payroll figures for the previous two months were revised downward.
However, traders still see an 87% probability of an interest rate hike in December, according to the CME Group's FedWatch tool.
Higher interest rates increase the opportunity cost of holding gold, which does not generate a return.
Data showed that activity in the US services sector slowed during September, while strong domestic demand strained supply chains and pushed a measure of prices firms bear for inputs to its highest level in more than four years, suggesting that inflation may remain elevated until 2027.
