Spot gold briefly dropped below the $1,900 mark before recovering as the resurgent US dollar and rising Treasury yields exerted pressure on the precious metal.
Gold’s most-active futures contract on New York’s Comex, December, settled down 0.9% at $1,919.80 an ounce.
The spot price of gold was down 0.8% at $1,900.29.
The US dollar reached its highest level since November, while Treasury yields hit 16-year highs, not seen since July 2007. The Federal Reserve’s projection of another rate increase by year-end, despite keeping rates unchanged in September, has contributed to the dollar’s strength.
Higher rates can boost the dollar, making gold less attractive to investors seeking yield-bearing assets. Gold, which doesn’t pay interest, can struggle in a high-interest-rate environment.
While gold has faced headwinds from rising yields and a strong dollar, it remains vulnerable to further declines if it falls below the $1,900 support level. Economists are watching the Fed’s hawkish stance, which could dampen global growth but aims to control inflation, including rising oil prices.
