Gold Rates Fell To $1725/oz, US Home Sales And Treasury Yield Rises, Dollar Gains

Gold prices in the international markets failed to keep up a good hold since August 2021, and the same trend is being followed this month. Today, on September 30, the spot gold prices opened at $1726/oz, and staying only marginally above this range. Yesterday, both gold futures and spot gold prices have also fallen considerably at around $1730/oz. On the Comex gold December future, the price fell 0.63% and was quoted at $1726, and the spot gold ask price dropped by 0.42% and was quoted at $1727 as of 8.27 PM IST yesterday. Last traded Comex price stood at $1732, till yesterday. This $1725 range is a significant drop in international gold prices. Gold is a dollar-dominated asset class, hence the prices are correlated with the US dollar and US economic trends. Yesterday, the US dollar index too, gained marginally. Today is the last trading day of September, but gold traders are not very hopeful about the metal’s price range in the upcoming month, October.

US home sales rises, impact on gold

The reason behind the present downward trend is the gaining dollar index. US treasury yield rises, on the other hand, US home sales data is in an affirmative position. The National Association of Realtors (NAR) recently stated that the USA’s pending home sales index increased to 119.5 jumping 8.1% positively in August, following July’s drop of 1.8%. This data was 1.1% higher than expectations. US housing sales were up moderately after 2 months’ consecutive fall showing economic recovery. Hence, gold is now failing to hold even the $1740 level and lost this year’s psychological high of $1800 long ago.

Treasury yield increases

The USA’s economy is presently on a path of swift recovery and the trend is anticipated positively by economists, including the US Federal Reserve. The Wall Street Journal in a report mentioned, “New orders for durable goods in the US are expected to increase in August as business investment and consumer spending remain positive.” US Fed Chair Jerome Powell’s hawkish statement on the country’s economy has already hiked US treasury yield. According to experts, the US treasury yield curve steepening is driving the dollar index higher, at the same time dampening the demand for bullion.

Expectations on the PCE index

On the other hand, the US Core Personal Consumption Expenditure (PCE) index will be published. Regarding that, FXStreet stated, “Core CPI slipped from 4.3% to 4%, indicating a similar retreat in Core PCE – from 3.6% to a range of 3.2% to 3.4%. That would still leave underlying price pressures at high levels, supporting the case for a taper announcement in November.” Jerome Powell earlier indicated that they will announce a reduction in bond-buying in the next meeting. Tapering will again drag down gold rates globally. At present, gold is starting trading with marginal highs, but ultimately falling in the latter half of a trading day.

Impact in India

In India, MCX gold future rates also dropped by 0.39% and stood at Rs. 45,777/10 grams yesterday till last traded. Daily Indian gold prices too are not rising much, as the rates depend on international trends. However, it is a good sign for common buyers before the festive season in India. Gold is a long-term profitable asset and if the buyers can purchase the precious metal at low rates, it will certainly give better returns in the future.