Gold prices end lower as bond yields edge higher, with focus on Fed’s rate path

Price action

• Gold futures for December
  GC00,
  -0.43%

  GCZ23,
  -0.43%
  fell by $6.10, or 0.3%, to $1,970 per ounce on Comex.

• Silver futures for September delivery 
  SI00,
  -1.02%

  SIU23,
  -1.02%
  shed 48 cents, or 2%, to $23.23 per ounce, the lowest for a most-active contract since July 6, according to Dow Jones Market Data.

• Palladium futures for September
  PA00,
  -2.56%

  PAU23,
  -2.56%
  fell by $28.40, or 2.3%, to $1,236.20 per ounce, and platinum futures for October delivery
  PL00,
  -2.34%

  PLV23,
  -2.34%
  declined by $1.60, or 0.2%, to $926.90 per ounce.

• Copper futures for September
  HG00,
  -2.61%

  HGU23,
  -2.61%
  declined 0.8% to $3.85 per pound.

Market drivers

Gold prices fell Monday as bond yields edged higher and investors focused on the chances for another rate hike from the Federal Reserve.

The U.S. dollar
DXY
edged up less than 0.1% at 102.0 against a basket of rival currencies on Monday, according to FactSet. Bond yields were also higher on Monday after last week’s jump in Treasury yields helped pull stocks lower.

Higher bond yields and a strong dollar can dull demand for gold. Several senior Federal Reserve officials recently said the door could be open to another hike of the central bank’s policy rate in September, in part due to the resilience of the U.S. economy, despite the highest Fed policy rate in 22 years.

Read: Here’s the trade that has pushed long-term Treasury yields to 2023 highs

“Fed rate hikes, to date, do not appear to be having the effect on the economy or the labor market that policy makers have been anticipating,” Mizuho Securities economists Steven Ricchiuto and Alex Pelle wrote in a Monday client note.

“After 525-550 basis points of rate hikes since March of last year, policy should already be dampening economic activity, especially after the regional bank failures between March and May,” they wrote.

New York Fed President John Williams on Monday told the New York Times that he feels the Fed is nearly finished with its campaign against inflation and that the central bank could start lowering rates again as soon as next year.

Fed governor Michelle Bowman said over the weekend that rates still need to rise higher to tame price pressures.

Investors will receive the next update on the state of U.S. inflation Thursday, when the consumer-price index for July is released. June data released last month spurred a rally in U.S. stocks after price pressures ebbed more quickly than economists had expected.

The 10-year Treasury
BX:TMUBMUSD10Y
yield was up 2 basis points on Monday to 4.07%.