Gold slumps 4.5% to $3,883 as dollar, bond yields climb

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KUWAIT: Gold prices ended last week with sharp losses of about 4.5 percent, closing at $3,883 an ounce under pressure from a stronger US dollar, rising ...

KUWAIT: Gold prices ended last week with sharp losses of about 4.5 percent, closing at $3,883 an ounce under pressure from a stronger US dollar, rising Treasury yields and expectations of continued tight US monetary policy, a report by Kuwait’s Dar Al-Sabaek said on Sunday.

A strong wave of selling pushed the precious metal below $4,000 an ounce and down to around $3,852, reflecting the pressure it faced during the week despite a limited recovery late in trading, the report said.

Markets saw a notable shift in expectations for US monetary policy after inflation data and comments by several Federal Reserve officials boosted the likelihood of further interest rate hikes at the December meeting, weighing on gold as a non-yielding asset, it said.

US producer prices for October came in below market expectations but were not enough to ease concerns about persistent inflation, especially after consumer price data showed rising price pressures.

Market expectations of a 25-basis-point US rate hike in December rose to around 90 percent, while the probability of a 50-basis-point increase stood at about 10 percent, the report said.

The US dollar index regained the 103-point level, near a 19-month high, while the yield on 10-year US Treasury bonds rose to around 5.15 percent, adding further pressure on gold.

Markets now await the minutes of the Fed’s Federal Open Market Committee (FOMC) meeting, due on Nov 18, for further signals on rate policy, as well as US retail sales and industrial production data for October, due on Tuesday. Stronger-than-expected data could increase pressure on gold, while signs of an economic slowdown could weigh on yields and the dollar and help the metal recover some losses, the report said.

Investors will also watch Chinese data on industrial production, retail sales, house prices, fixed-asset investment and unemployment, as well as geopolitical developments in the Middle East and risks to oil supplies and shipping.

On the technical side, the $3,850-$3,852…

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