Breaking News
LAST CHANCE for Cyber Monday SALE: Up to 54% off InvestingPro! Register here
Investing Pro 0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

Gold Bludgeoned Again by U.S. Yields Amid Rate Speculation

CommoditiesSep 28, 2021 03:02PM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters.

By Barani Krishnan

Investing.com - Gold was bludgeoned again by the scythe of U.S. yields on Tuesday amid relentless talk that the Federal Reserve will be pressured to raise rates sooner rather than later to arrest galloping inflation.

U.S. gold futures’ most active contract, December, settled down $14.50, or 0.8%, at $1,737.50 per ounce on New York’s Comex. It hit a bottom of $1,727.60 during the session for a seven-week low.

“Treasury yield curve steepening is driving the dollar higher and dampening demand for bullion,” said Ed Moya, analyst at online trading platform OANDA.

“Rubbing salt in gold’s wound is that it is not attracting any safe-haven flows as risk aversion accelerates with the S&P 500 having its worst outing since May, the Nasdaq its worst performance since March, and as the Dow turns negative for the quarter.”

The yield on the U.S. 10-year Treasury note was at 1.532% by 2:50 PM ET (18:50 GMT), rising 2% in just under a week from a reset of inflation expectations.

The Dollar Index, pegged against six major currencies led by the euro, was up 0.4% at 93.75.

“If global bond yields continue to rise, gold seems vulnerable to a test of the $1,700 level,” Moya added.

At his news conference after the Fed’s September policy meeting last week, Chairman Jerome Powell suggested mid-2022 as an appropriate target for concluding the central bank’s monthly bond-buying of $120 billion. The Fed’s so-called dot-plot plan also called for interest rates, suppressed at near-zero since the Covid-19 outbreak, to be raised any time next year onwards, he said.

Since then, Fed officials have issued mixed messaging on the timeline for both the taper and rate hike. Powell has admitted that inflation was trending above the Fed’s 2% per annum target but said that was transitory and will abate over time. He reiterated that before a Senate banking committee on Tuesday, although he admitted that supply chain issues resulting from the Covid-19 pandemic need to be resolved before inflation can be mitigated.

The question of when the Fed ought to taper its stimulus and raise interest rates has been hotly debated in recent months as economic recovery conflicts with a resurgence of the coronavirus’ Delta variant.

The Fed’s stimulus program and other monetary accommodation have been blamed for aggravating price pressures in the United States. The central bank itself has spent an estimated $2.2 trillion in propping up the U.S. economy with its stimulus program since the Covid-19 outbreak.

Besides the central bank’s spending, federal government aid for the pandemic, which began under the Trump administration, has reached at least $4.5 trillion to date. And the Biden administration is asking Congress to approve almost $4 trillion more for its so-called “Build Back Better” plan

After declining 3.5% in 2020 from business shutdowns owing to Covid-19, the U.S. economy expanded robustly this year, expanding 6.5% in the second quarter, in line with the Fed’s forecast.

The Fed’s problem, however, is overwhelming inflation and an underperforming job market.

The Fed’s preferred gauge for inflation - the core Personal Consumption Expenditures Index, which excludes volatile food and energy prices - rose 3.6% in the year through July, its most since 1991. The PCE Index including energy and food rose 4.2% year-on-year.

The Fed’s own target for inflation is 2% per annum.

Gold Bludgeoned Again by U.S. Yields Amid Rate Speculation
 

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Comments (5)
MuraliKrishna Brahmandam
MuraliKrishna Brahmandam Sep 28, 2021 5:54PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Constipated droppings would not help gold. Must be big chunky lumpy droppings
MuraliKrishna Brahmandam
MuraliKrishna Brahmandam Sep 28, 2021 5:51PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Very soon I will cure Dr. Jerome Bubble of his severe constipation problem to make him deliver big chunky lumpy droppings in stocks. That should help gold lift off in contrast with predicted rate lift-off
Sol Wein
Sol Wein Sep 28, 2021 4:43PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Just keep buyin. These prices are a gift
peter neal
peter neal Sep 28, 2021 3:50PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Interest on thy Debt will soon be one Trillion a year. Long live the Bolivar and Socialism. Worked well for Venezuela and soon to be the here. Think ahead and not near term.
Tripp Becker
Tripp Becker Sep 28, 2021 3:14PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
"Bludgeoned"... LOL Looked at any other assets?!
Barani Krishnan
Barani Krishnan Sep 28, 2021 3:14PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
The story makes clear that both the s&p and nasdaq getting scalped too. it's just an expression. The numbers tell the story.
milena villa escobar
milena villa escobar Sep 28, 2021 3:14PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Barani Krishnan  forget the mumbo jumbo.  Buy gold and hold .  now it's just a matter of time
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email