Gold slips as stronger dollar and high Treasury yields weigh on bullion

what happened

Gold prices edged lower on Monday, Reuters reported, as a firmer dollar and elevated US Treasury yields pressured the metal. Spot gold dropped 0.4% to $4,147.87 per ounce by 2:09 p.m. EDT (1809 GMT), while December US gold futures settled 0.5% lower at $4,160.10. The dollar rose, making gold more expensive for holders of other currencies, and 10-year Treasury yields climbed 0.6%.

Investors are waiting for the Federal Reserve's policy decision next week, when officials are widely expected to keep rates unchanged. Forex.com analyst Fawad Razaqzada said the tone of the Fed's guidance may matter more than the decision itself, and that a hawkish message could bring further short-term weakness for gold. CME FedWatch data showed traders pricing an 82.8% chance of no change this month and 90% odds of a December hike.

Among other metals, spot silver gained 0.6% to $57.37 an ounce, platinum rose 1% to $1,646.30 and palladium climbed 0.9% to $1,122.

why it matters

Gold is usually seen as a hedge against inflation, but higher interest rates reduce the appeal of an asset that pays no yield. Next week traders will also watch US PCE inflation data, the central bank's preferred gauge of inflation. The Fed raised rates by a quarter point in September, its first hike this year.

market impact

Gold, silver, platinum: stronger dollar and higher yields raise the cost of holding non-yielding metals

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