Gold prices fell due to the rise in US Treasury yields
After gold prices suffered sharp losses of up to 0.68% during the past week, gold trading witnessed strong declines at the beginning of the new week. This decline came as a result of the rise in US Treasury bond yields of all maturity periods. These returns exceeded their previous levels, which negatively affected the attractiveness of gold as a safe haven for investors.
Alongside the rise in bond yields, we have also seen a decline in global economic growth concerns. As some countries began to move towards recovery from the repercussions of the pandemic, which had a positive impact on the financial markets and increased demand for high-risk assets such as stocks.
Although geopolitical tensions and unrest continue in the Middle East, gold has not benefited significantly from these factors in recent trading. Gold is usually considered a safe haven in situations of geopolitical instability, as investors turn to it as a means of protection against potential risks.
However, the failure of gold prices to rise despite continuing tensions can be explained by several factors. The sharp rise in US Treasury bond yields may be one of the main reasons that increases the attractiveness of these bonds as an investment alternative. Also, improving global economic growth expectations could push investors towards riskier assets.
In trading on Monday, gold prices witnessed a decline as spot contracts for the gold metal recorded a decline of about 0.26% to reach $1,987.32 per ounce. Meanwhile, December gold futures prices fell approximately 0.24% to $1,994.50 per ounce.
It is important to follow these developments to understand how gold prices change over time and how they are affected by surrounding factors. Gold remains an important asset in investors’ portfolios as a means of diversification and protection, but remains vulnerable to market volatility.
Factors influencing gold price in the daily trading session
Several factors influenced the strengthening of the downward momentum in gold trading today, and among these factors are:
Rising US Treasury bond yields: Rising US Treasury bond yields negatively affect gold prices
In today’s trading, we witnessed a rise in US Treasury bond yields of various terms, and this rise negatively affected gold prices. Gold is usually considered a safe haven for investors in difficult economic times, but when US Treasury yields increase, they have a better investment opportunity.
Gold price movements and government bond yields are usually governed by an inverse relationship. When bond yields rise, the cost of borrowing increases and the attractiveness of investing in bonds increases compared to precious metals such as gold. This is what we saw today as US Treasury yields rose.
If you are an investor looking for investment returns, US Treasuries become a more attractive option in such cases. If you own government bonds, you will receive a fixed income from the interest these bonds pay. As bond yields rise, investors can achieve higher returns.
Based on updates in the US bond market today, US 10-year Treasury yields appear to have risen by an estimated 0.82% to a level of around 4.595%. Not only that, but 20-year US Treasury bond yields also rose by an estimated rate of about 0.58%, reaching a rate of approximately 4.956%, and as for 30-year US Treasury bond yields, they recorded an increase of about 0.60%, reaching about 4.781%. .
Rising returns can be the result of several factors, including expectations of higher interest rates in the future and economic pressures. These changes reflect fluctuations in financial markets and may affect investments, loan rates and other financial decisions.
Gold fell due to easing economic growth concerns
Gold is often supported as a safe haven during periods of economic volatility and turmoil, but as these turmoil subside, demand for gold decreases significantly during trading.
Regarding this matter, Chinese Premier Li Qiang stated that his country is committed to protecting the rights and interests of foreign investors in accordance with applicable laws. He also stressed that China will continue to provide a market-oriented business environment that complies with international standards.
He stressed that China, as the second largest economic power in the world, will work to facilitate investors’ access to its markets and implement policies aimed at removing all restrictions imposed on foreign investments in the manufacturing sector.
This statement reflects China’s commitment to promoting foreign investment and stimulating economic growth, and shows a clear understanding of the importance of opening up the Chinese economy to foreign investment. This is expected to attract more foreign investors to China and enhance international economic cooperation.
The positive impact of the Chinese Premier’s statements on the markets reflects expectations of an improvement in the economic situation in China and a positive impact on economic growth globally. Reduced demand for gold is a direct result of this optimism, as gold is typically seen as a safe haven in difficult economic times. With increased confidence in the economic recovery and expected global stability, investors could reduce their holdings of gold and look for other investment opportunities.
However, keep in mind that effects on markets may be temporary, and economic and political conditions may change rapidly.
For metals other than gold, spot silver prices saw a marginal rise of 0.05%, reaching $23.2260 per ounce. Spot platinum prices increased by about 0.75%, reaching $937.00 per ounce, while spot palladium prices increased by about 1.09%, reaching about $1,131.65 per ounce.
Gold futures prices fell during the European session
During the European session on Monday, gold futures saw a clear decline. According to the New York Mercantile Exchange (COMEX) classification, December gold contracts were trading at $1,992.05 per ounce at the time of writing, representing a decline of 0.36%.
This decline indicates volatility in the gold futures markets during that session. It is important to follow gold price movements carefully, as gold is affected by multiple factors such as inflation, geopolitical factors, and fluctuations in the financial markets. Gold is usually considered a safe haven during times of mixed markets and instability.
It previously traded in a session where the price of gold fell by $1,989.05 per ounce. Gold could have support points at $1,978.20 and resistance points at $2,011.90.
Dollar Index contracts, which are used to measure the US currency’s performance against a basket of six other major currencies, fell by 0.11% in the last trading session, reaching $104.74.
This decline in the value of the dollar index reflects the strength of the US dollar compared to other currencies in the basket of major currencies. The movements of the dollar index reflect changes in the global market and their impact on the US dollar. The dollar index is affected by multiple factors including the monetary policy of Federal Reserve, economic changes, political events, and global tensions.
At the same time on the New York Mercantile Exchange (COMEX), silver contracts for December saw a decline of 0.05%, reaching $23.27 per ounce. This decrease reflects the movements of the price of silver in the market.
On the other hand, the December copper price rose by 0.70%, reaching $3.71 per pound. This rise reflects an improvement in copper prices in the market, and may be related to factors such as global demand for the metal and a positive economic outlook.