Gold Struggles to Sustain Gains as Elevated US Yields and Strong Dollar Offset Dovish Fed Repricing
| Pair | Now | Since publish |
|---|---|---|
| XAUUSD | — | — |
- Gold (XAU/USD) fell to two-month lows near $4,110.
- Softer US PCE and NFP data reduced Fed rate hike bets.
- Elevated US Treasury yields and strong USD capped Gold’s recovery.
Gold (XAU/USD) initially dropped to a two-month low near $4,110 at the start of the week, pressured by a hawkish Federal Reserve outlook and elevated US Treasury yields. The precious metal saw some recovery attempts, trading around $4,150-$4,180, as softer US Personal Consumption Expenditures (PCE) data, showing core inflation at 3.0% YoY in August, tempered expectations for an immediate Fed rate hike. However, a significant rebound failed to materialize as US Treasury yields, including the benchmark 10-year yield reaching multi-decade highs near 5.34%, continued to increase the opportunity cost of holding non-yielding bullion. Following the release of the US Nonfarm Payrolls report, which showed a much lower-than-expected 29,000 jobs added in September and an unemployment rate rising to 4.2%, market participants significantly trimmed bets on an October Fed rate hike. Despite this dovish repricing, Gold struggled to hold gains above $4,200, with the US Dollar strengthening to new year-to-date highs and elevated yields remaining a primary constraint on any sustained upward movement.