Gold Slides as Dollar, U.S 10-Year Treasury Yield Rebound
Gold declined to around $3,740 per ounce on Thursday, dropping for a second session since reaching a record high of $3,790. The price depreciation reflects reducing appetite for the safe haven assets post U.S Federal Reserve rates cut.
US dollar is trading positively against major trading pairs, espcially the British Pounds, the Euro and Japaness Yen as well as Canadian dollar – though market noted increasing volatility.
Softer expectations of cuts by the Fed drove yields in shorter notes to rise more than those in longer bonds, trimming the yield steepening from this quarter.
Trading data revealed that silver traded above $44 an ounce, near a 14-year high, as firmer industrial offtake and tighter physical availability outweighed stronger US macro data that lifted yields and the dollar.
Still, higher demand for safe-haven assets and a pivot away from the dollar this year maintained the appeal for gold, which trades 45% higher since the start of the year.
Uncertain economic policy and hawkish geopolitical views by the US, in addition to challenges on the Fed by the White House and signals of unsustainable deficit spending drove foreign markets to prefer holding gold.
Consequently, the People’s Bank of China piled on gold for 10 straight months, and Chinese infrastructure offered to be a gold custodian for foreign markets.
On Thursday, the yield on the US 10-year Treasury note rose toward 4.2% on Thursday, extending the rebound from the five-month low of 4% touched last week as markets as strong economic data reduced the urgency for more rate cuts by the Federal Reserve.
The US GDP was revised higher to reflect an annualized growth of 3.8% in the second quarter, while durable goods orders were sharply above market expectations.
Market noted that initial unemployment claims sank for a second straight week to a two-month low, pushing against earlier concerns of a rapid deterioration in the labor market, which previously drove FOMC members to cite the need for additional rate cuts. Investors Trade 481m Insurance Stocks on Nigerian Exchange
