Gold declines as dollar gains ground, while US treasury yields spike
Gold prices fell on Monday as the dollar gained ground against most major rivals while US treasury yields gained ground.
Wall Street was highly pressured this month as the Fed continues to hint at extended policy tightening, and amid concerns about the health of the economy.
Such pressures coincide with higher US treasury yields, while oil prices surge as well above $95 a barrel for the first time since last year.
Investors now await important US consumer spending data, important for gauging inflation.
Otherwise, the dollar index rose 0.4% as of 20:59 GMT to 105.9, with a session-high at 106.1, and a low at 105.5.
Gold spot prices fell 0.6% as of 21:00 GMT, or $11 to $1,934.8 an ounce.
Wall Street heads higher despite pressure from bond yields
Most US stock indices rose on Monday despite pressure from higher US treasury yields following recent policy statements from the Federal Reserve.
Wall Street was highly pressured this month as the Fed continues to hint at extended policy tightening, and amid concerns about the health of the economy.
Such pressures coincide with higher US treasury yields, while oil prices surge as well above $95 a barrel for the first time since last year.
Investors now await important US consumer spending data, important for gauging inflation.
Since the start of September, the S&P 500 fell over 4%, while NASDAQ shed 5.9%, as Dow Jones fell 2.2%
Today, Dow Jones is down 0.1% to 33,944, while S&P 500 rose 0.2% to 4,330, as NASDAQ gained 0.4% to 13,258.
Brent crude extends losses amid concerns about China, dollar strength
International benchmark Brent fell in European trade for the second session, almost hitting a two-week trough under pressure from the dollar.
It coincides with renewed concerns about weaker demand in China as the real estate crisis grows deeper, which could heavily impact growth.
Brent Price
Brent fell 0.8% to $91.65 a barrel, with a session-high at $92.69, after losing 1.1% on Friday, the third loss in four days on profit-taking off ten-month highs at $95.91.
Brent lost 2.2% last week, the first weekly loss in a month as US yields surge as the Fed hints at an additional interest rate hike this year.
The Dollar
The dollar index rose 0.4% on Monday for the second session, hitting ten-month highs at 105.96 against a basket of major rivals.
A stronger dollar weighs on commodities and minerals and makes them costlier to holders of other currencies.
Such gains came after a spate of bullish remarks by Fed officials, which strongly hint at another interest rate hike this year.
Chinese Demand
Chinese real estate stocks tumbled heavily after Evergrande cancelled a meeting with debtors today.
The renewed pressures on China's real estate market threatens an overall crisis in the economy, which could damage fuel demand.
Dollar hovers near six-month high as US yields spike
Dollar rose in European trade on Monday against a basket of major rivals, maintaining gains for second day as US treasury yields spiked for new highs.
Bets are still high the Federal Reserve will raise interest rates by 25 basis points by the end of the year following a batch of bullish data.
The Index
The dollar index rose 0.2% to 105.76 with a session-low at 105.52, after rising 0.2% on Friday, the third profit in four days, marking a six-month high at 105.78.
The index rose 0.9% last week, the tenth weekly profit in a row, marking the longest weekly profit steak since July 2014.
US Yields
US 10-year treasury yields rose 1.6% on Monday, hitting 16-year high at 4.511% and bolstering investments in the dollar.
The gains came after the Federal Reserve hinted strongly at another interest rate hike this year.
Such a decision came as the Fed prefers to gauge the impact of recent decisions on US data, opening the door for another 0.25% hike before the year end to combat inflation.
Following the hike, the Fed is expected to start cutting interest rates in 2024, but by a slower pace than previous expected.
Fed Chair Jerome Powell asserted that controlling inflation is expected to be a long-term process, which requires high interest rates for an extended duration.
Fed Remarks
Several Fed officials hinted last Friday at several more interest rate hikes, and said the battle with inflation isn't over yet.
US Rates
Current pricing for a 0.25% interest rate hike in November stands at 25%, which is still rather low.
However, pricing for a 0.25% Fed interest rate hike stands at a higher 41%.