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Gold prices declined on Tuesday, influenced by a rising dollar and higher U.S. Treasury bond yields, while expectations of a lower likelihood of U.S. interest rate hikes this month limited the precious metal's losses.
Spot gold decreased by 0.3% to $4128.69 per ounce by 01:55 GMT, while U.S. gold futures were nearly stable at $4156.
The rising dollar makes gold, priced in the U.S. currency, more expensive for holders of other currencies, while U.S. Treasury bond yields for 10 and 30 years rose on Monday to their highest levels in 24 years, amid a negative bond market situation.
Kyle Roda of Capital.com stated that fundamental factors remain supportive of gold in the long term, indicating that geopolitical developments in the Middle East could be the next major catalyst, while any significant change in U.S. interest rate expectations could lead to a strong price movement.
Expectations of a U.S. interest rate hike in October decreased after data showed a more-than-expected slowdown in job growth in September, along with downward revisions to job data for the previous two months.
Currently, traders estimate an 87% chance of a U.S. interest rate hike in December, according to CME Group's FedWatch tool.
Higher interest rates increase the opportunity cost of holding gold, which does not generate a return.
U.S. economic data showed a slowdown in the services sector in September, while domestic demand remained strong, putting pressure on supply chains, and the input price index reached its highest level in over 4 years, indicating that inflationary pressures may persist until 2027.
Prices of other precious metals also declined, with silver falling 0.6% to $60.67 per ounce, platinum 0.7% to $1710.08, and palladium 0.2% to $1170.15.
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