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Gold Prices Approach $4,180 as Treasury Yields Decline
Gold prices rose toward $4,180 per ounce during Asian trading on Friday, marking a recovery from a two-month low reached earlier in the week. This increase is attributed to a decline in U.S. Treasury yields, which have eased for two consecutive sessions after hitting a 24-year high. The recent pause in the dollar's rally has also contributed to the demand for gold, making it more affordable for buyers using other currencies.
The Federal Reserve's monetary policy remains a significant factor influencing gold prices. St. Louis Fed President Alberto Musalem indicated that further interest rate hikes may be necessary to achieve the inflation target of 2%. Market participants are currently pricing in an 18% chance of a rate hike in October and an 82% chance by December, according to CME's FedWatch tool. This uncertainty surrounding future rate increases keeps gold prices under pressure, as higher interest rates typically diminish gold's appeal compared to interest-bearing assets.
Geopolitical factors have also played a role in shaping market sentiment. President Donald Trump announced that the U.S. would not engage in military action against Iran before the upcoming midterm elections, describing recent discussions with Tehran as productive. This development has reduced the immediate safe-haven demand for gold, although tensions remain due to ongoing military readiness in the region. Traders are now closely monitoring upcoming U.S. economic data for insights ahead of the Fed's October meeting, with Treasury yields expected to remain a key driver of gold prices.
Source: KLEA News