Gold futures slipped to a two-week low as broader financial markets were down. The yellow metal has struggled to maintain momentum despite broader economic volatility.
December gold futures plunged $75.40, or 1.81%, to $4,074.90 per ounce at 12:05 GMT on Thursday on the COMEX division of the New York Mercantile Exchange. Gold prices are down almost 3% this week and have slumped almost 6% year-to-date.
Silver, the sister commodity to gold, also fell sharply. November silver futures erased $1.92, or 3.3%, to $55.79 an ounce. The white metal fell $1.93, or 3.34%, to $55.78 per ounce. Silver prices are down 21% this year.
Market watchers attribute the yellow metal’s decline to expectations that the Federal Reserve will raise interest rates before year-end, with traders pointing to December for another quarter-point hike.
Meanwhile, US Treasury bond yields are down across the board. The benchmark ten-year yield tumbled more than nine basis points to below 5.05%. The 30-year fell eight basis points to 5.36%. The two-year yield, which tends to track Fed policy expectations, erased nine basis points to 4.73%.
Gold is generally sensitive to a rising-rate environment because it raises the opportunity cost of holding non-yielding bullion.
Meanwhile, the US Dollar Index (DXY), which measures the greenback against a weighted basket of currencies, was flat at 101.80. The index is poised for a weekly loss of 0.8% and is up 3.5% year-to-date.
A stronger buck is typically bearish for dollar-denominated commodities because it makes it more expensive for foreign investors to purchase.
It is light on data this week, but next week will bring third-quarter GDP growth and PCE inflation, along with the Federal Reserve’s interest rate decision.
“Given that the PCE data will show that prices rose at an uncomfortably high pace for the Fed, the FOMC communications may strike a hawkish tone and that could weigh on gold prices,” said Hamad Hussain, climate and commodities economist at Capital Economics, according to CNBC.
In other metal markets, November copper futures declined $0.1625, or 2.5%, to $6.415 per ounce. November platinum futures fell $47.90, or 2.93%, to $1,588.00 an ounce. November palladium futures tumbled $32.90, or 3.02%, to $1,057.00 per ounce.