As on the previous day, the gold price came under further pressure amid increasing speculation about rising interest rates in the United States. Further momentum came from the US bond market and statements by various Fed representatives.
Investors are concerned about further interest rate hikes in the US
For example, Tom Barkin, president of the regional Federal Reserve Bank of Richmond, said this week that it could take some time for inflation to ease again. However, it remained unclear whether another interest rate hike was necessary.
His colleague Susan Collins from the Boston Fed branch pointed out that a „more restrictive key interest rate“ will help bring price pressures consistently back to the target level. In the medium term, the Fed is aiming for an inflation rate of 2.0 percent. Consumer prices, including the drivers energy and food, stood at 3.4 percent in August (compared to the same month last year).
The CME Group's „FedWatch Tool“ currently indicates that a total of 68.6 percent of market participants expect a combined quarter-percentage-point interest rate hike at the October 28 meeting. In contrast, 31.4 percent expect a rate pause. The target rate band itself is currently between 3.75 and 4.00 percent.
Gold Price (XAU/USD)
US Treasury increases volume of long-term government bond buyback program
The US Treasury Department announced that, as part of its buyback program, it will purchase so-called government bonds with a maturity of 20 to 30 years valued at up to $6 billion. As early as August, the agency had announced its intention to increase the volume of its buybacks of longer-dated securities to a minimum of $4 billion in the next quarter.
Yields on 30-year US Treasury bonds rise to their highest level since 2004
The yields on 30-year US Treasury bonds stood at around 5.455 percent on Thursday afternoon, reaching their highest level since 2004. Among other factors, the rise is driven by fears of inflation as well as interest rates remaining high longer than expected. The ongoing war involving Iran, which has lasted for months and led to a sharp increase in oil prices, has fueled inflation concerns and, not least, forced central banks around the globe to initiate a more restrictive monetary policy in order to rein in inflation.
30-year US Treasury bonds
