Gold Futures Settle Lower As Dollar, Bond Yields Rise
Gold futures came off three-week highs and settled lower on Wednesday, as the U.S. dollar rebounded and bond yields surged higher amid slightly fading hopes about a less-aggressive monetary policy stance by the Federal Reserve.
The dollar had tumbled in recent sessions after weaker than expected manufacturing data and construction spending report raised hopes the Fed will be less hawkish in its policy stance.
The dollar index climbed 111.74, and despite dropping to 111.30 subsequently, remained high above the flat line, gaining about 1.12%.
The yield on long term U.S. 10-year Treasury note rose to 3.769%
Gold futures for December ended lower by $9.70 or about 0.6% at $1,720.80 an ounce.
Silver futures for December ended down $0.555 at $20.544 an ounce, while Copper futures for December settled at $3.5005 per pound, up $0.0105 from the previous close.
San Francisco Federal Reserve Bank President Mary Daly said on Tuesday the U.S. central bank needs to deliver “further rate hikes” and then hold those restrictive policies in place until it’s “truly done” on inflation.
Also, hawkish commentary from the Reserve Bank of New Zealand (RBNZ) suggested that fighting inflation is still a priority for many central banks.
The RBNZ today delivered a 50-bps rate hike for the fifth consecutive meeting and reiterated its resolve to break inflation back down to 2 percent.
In economic news today, the Institute for Supply Management released a report showing a modest slowdown in the pace of growth in U.S. service sector activity in the month of September.
The ISM said its services PMI edged down to 56.7 in September from 56.9 in August, although a reading above 50 still indicates growth in the sector. Economists had expected the index to dip to 56.0.
A report released by payroll processor ADP showed private sector employment in the U.S. increased by slightly more than expected in the month of September, surging by 208,000 jobs after climbing by an upwardly revised 185,000 jobs in August.
Economists had expected employment to jump by 200,000 jobs compared to the addition of 132,000 jobs originally reported for the previous month.
Data from the Commerce Department showed U.S. trade deficit narrowed to $67.4 billion in August from a revised $70.5 billion in July. Economists had expected the deficit to shrink to $68.0 billion from the $70.6 billion originally reported for the previous month.
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