Gold prices fall to $4,142 per ounce as US bond yields continue to rise

Kuwait City, Oct 4 (KUNA) -- Gold prices ended last week’s trading on a decline, closing at $4,142 per ounce, marking losses for the second consecutive week amid rising U.S. Treasury yields, which limited the precious metal’s ability to capitalize on weak U.S. labor market data.

In a report issued on Sunday, Kuwait’s Dar Al-Sibaak company stated that gold experienced volatile movements last week, attempting to reclaim the $4,200 per ounce level but failing to sustain gains above it. Prices retreated by the end of the week as pressure from rising U.S. yields persisted.

The report noted that gold’s decline occurred despite the release of weaker-than-expected U.S. jobs data. The non-farm payrolls report showed the U.S. economy added only 29,000 jobs in September, compared to expectations of around 90,000, while the unemployment rate rose to 4.2 percent from 4.1 percent. These figures bolstered market expectations that the Federal Reserve would keep interest rates unchanged at its next meeting. However, rising Treasury yields limited the impact of the weak data on the dollar and gold prices.

The report highlighted that rising U.S. Treasury yields remain one of the most significant pressure factors on the precious metal, as higher yields increase the opportunity cost of holding gold, which is a non-yielding asset. It added that despite weak labor market data, U.S. yields remained at elevated levels, prompting investors to reassess their expectations regarding the trajectory of monetary policy in the coming months, particularly amid ongoing inflation concerns.

The report pointed out that the Federal Reserve had raised interest rates in September by 25 basis points to a range of 3.75 to 4.0 percent, while markets are currently awaiting new signals that could determine the direction of monetary policy in upcoming meetings.

It further noted that the U.S. dollar continued to influence gold’s movement, as a stronger dollar makes the precious metal more expensive for investors using other currencies, potentially limiting demand.

Conversely, the report stated that markets are monitoring oil and energy price movements and their impact on inflation rates. Rising energy prices are viewed as a factor that could reignite inflationary pressures and affect interest rate expectations, while a decline in energy prices could provide central banks with more room to ease monetary policy.

Geopolitical developments in the Middle East remained a key factor in market movements, with investors continuing to turn to gold as a hedge asset during periods of heightened uncertainty.

The report indicated that investors’ attention this week is focused on a range of U.S. economic data and events, including a services sector indicator, the minutes of the Federal Open Market Committee meeting, statements by Federal Reserve officials, and consumer confidence data. These indicators are particularly significant following the weak jobs report, as they will help determine the extent to which the slowdown in the labor market affects U.S. monetary policy expectations.

The report noted that if data show continued strength in economic activity and rising inflationary pressures, bond yields and the dollar may remain pressure factors on gold. Conversely, additional indicators of economic slowdown could support expectations of stable or lower interest rates, providing support for the precious metal.

From a technical perspective, the report stated that the $4,200 per ounce level represents a significant barrier to recovery attempts, after gold failed to stabilize above it during last week’s trading. It clarified that if prices manage to reclaim and hold above $4,200, attention may shift to higher resistance levels, while nearby support zones are concentrated at $4,100, followed by the $4,000 level, which represents a key psychological and technical barrier.

The report added that the movement of the dollar and U.S. Treasury yields will remain among the most prominent factors determining gold’s direction in the coming period, alongside energy price developments and geopolitical risks.

On the local front, the report stated that the price of 24-karat gold reached approximately 4.460 Kuwaiti dinars per gram (about $134), while 22-karat gold recorded around 3.380 Kuwaiti dinars (about $123). The price of a kilogram of silver reached approximately 6.570 Kuwaiti dinars (about $2,133). (End) S.M.R. / H.T. / N.W.F.