Gold Price Settles Lower, As Treasuary Yields Jump

October 4, 2018

New York (Oct 4)  Gold prices edged lower for a second straight session on Thursday, as US treasury yields rose to the highest levels in about seven years, after the latest batch of economic data increased the likelihood of the Federal Reserve resorting to more aggressive monetary tightening.


It is widely expected that the Fed would hike interest rate by 25 basis points in December this year, and announce three more increases in 2019.

Equity markets tumbled amid mounting worries about US-China trade dispute and its impact on the global economy.

Gold futures for December ended down USD1.30, or 0.1%, at USD1,201.60 an ounce.

On Wednesday, gold futures ended down USD4.10, or 0.3%, at USD1,202.90 an ounce.

Silver futures for December declined by USD0.080, to USD14.590 an ounce.

Copper futures for December settled at USD2.7775 per pound, losing USD0.0565 for the session.

The developments in Italy are being closely watched by investors across the globe.

The Italian coalition government, which needs to obtain European authorities' approval to keep the 2019 deficit level at 2.4%, has set a budget deficit target of 2.1% of GDP for 2020 and 1.8% of GDP in 2021.

Speaking at the Atlantic Festival in Washington, D.C. after the close of trading on Wednesday, the Federal Reserve Chief Jerome Powell said that interest rates "are a long way from neutral" even after recent increases.

"The really extremely accommodative low interest rates that we needed when the economy was quite weak, we don't need those anymore. They're not appropriate anymore," Powell told Judy Woodruff of PBS.

"Interest rates are still accommodative, but we're gradually moving to a place where they will be neutral," he said, and added, "We may go past neutral, but we're a long way from neutral at this point."

In economic news today, the US Labor Department released a report showing a bigger than expected drop in initial jobless claims in the week ended September 29th. The report said initial jobless claims fell to 207,000, a decrease of 8,000 from the previous week's revised level of 215,000. Economists had expected jobless claims to edge down to 213,000 from the 214,000 originally reported for the previous week.

Meanwhile, data from the Commerce Department showed a bigger than expected 2.3% jump in factory orders in the month of August. In July, order were down by a revised 0.5%.


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