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Gold Closes Higher, With Strong Retreat In Treasury Interest Rates And Dollar Low

Bruno T
Latest News
August 29 2023 2:20PM

The price of gold (CCOM:GOLD) closed with a high in NY and reached a three-week high on Tuesday, supported by the sharp decline in Treasury interest rates and the general low of the dollar, after weak data from the US labor market.

The Jolts report showed that open job openings in the country are at the lowest level since March 2021, after three consecutive monthly declines.

The data, plus the drop in American consumer confidence measured by the Conference Board, raised the bet that the Fed will no longer touch interest rates this year. On the Comex, the December contract was up 0.94% to trade at USD1,965.10 a troy ounce.

Investors are now looking to the US Consumer Expenditure Price Index, which is due out on Thursday, and the Non-Farm Payrolls, on Friday, for more clues on the path in interest rates.

According to the CME FedWatch tool, traders now see an 86% chance the Fed will keep rates unchanged at its September meeting, up from 78% prior to the data.

Higher interest rates increase the opportunity cost of holding precious metals without yield.

Reflecting the sentiment, SPDR Gold Trust (AMEX:GLD), the world’s largest gold-backed exchange-traded fund, said its holdings were up 0.3% on Monday.

“The fact that the price has been recovering since the middle of last week suggests that the selling pressure exerted by speculative financial investors has eased,” wrote Carsten Fritsch, an analyst at Commerzbank, in a note.