Gold Prices Decline Amid Weak Demand and Rising U.S. Bond Yields

Gold prices saw a notable decrease during Thursday’s trading, driven by weakened demand for the precious metal. This downturn followed the release of positive U.S. economic data that strengthened optimism surrounding the resilience of the American economy.

Spot and Futures Gold Performance: In the futures market, gold prices dropped by 0.75%, or $20.9, settling around $2,779 per ounce. Spot gold prices also declined, falling by 0.76% or $21.4, to trade near $2,766 per ounce.

Factors Contributing to Gold’s Decline: Gold's value has been affected by increased yields on U.S. bonds. The yield on 10-year U.S. Treasury bonds rose by 0.92% to approximately 4.306%, while 20-year bond yields climbed by 0.58% to about 4.620%, and 30-year yields advanced by 0.42% to 4.498%. These rising yields have reduced demand for gold, leading to a dip in its market value.

Moreover, newly released U.S. economic data, particularly the Federal Reserve's preferred inflation gauge, the personal consumption expenditure (PCE) index, showed a rise of 2.7% annually. This exceeded market expectations, which anticipated a slight decline to 2.6%, but matched the August figure.

Impact of Anticipated Rate Cuts on Gold: Expectations of a slight reduction in U.S. interest rates during the Fed’s November meeting also weighed on gold prices. Market sentiment currently places a 96.1% likelihood on a 25 basis point cut, while the chance of rates remaining unchanged sits at 3.9%. This anticipated policy shift has added pressure on gold trading.

Other Metal Markets: In other metal markets, silver futures saw a 2.21% decline, trading near $33.320. Platinum futures dropped by 0.91%, landing around $1,012.45, while palladium futures recorded a 1.63% decline to approximately $1,135.03 per ounce.

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