Gold prices fell in European trade for the seventh straight session, plumbing seven-month lows and on track to drop below $1,800 under pressure from the dollar.

US dollar scaled an 11-month peak against a basket of major rivals, while US 10-year treasury yields hit a fresh 16-year peak following strong US data and bullish remarks by Fed officials. 

Gold Prices Today

Gold prices fell 0.7% to $1,815 an ounce, the lowest since March, after losing 1.15% on Monday, the sixth loss in a row, and the longest such streak of losses since 2023, following a spate of upbeat US data. 

The Dollar

The dollar index rose 0.2% on Tuesday, extending gains for the third straight session and scaling an 11-month high at 107.21 against a basket of major rivals. 

A stronger dollar weighs on dollar-denominated gold futures as they become costlier to holders of other currencies.

US Yields 

US 10-year treasury yields spiked 0.5% today, scaling a 16-year high at 4.704%, pressuring non-yielding assets. 

Recently the US government managed to avoid another partial shutdown, in turn hurting demand on US bonds and boosting yields. 

Strong Data

US services data showed the vital sector is slowing approaching a recovery as demand improves.

Such data showcases the strength and flexibility of the US economy despite higher US interest rates.

Such data bolstered the case for another 0.25% Fed interest rate hike at either the October or December policy meetings.

Aggressive Remarks 

Federal Reserve official Michelle Bowman said the time is likely appropriate for another interest rate hike before maintaining rates at high levels for some time,

Cleveland Fed President Loretta Mister said the Fed will likely need to raise interest rates once more this year to bring inflation back to 2%. 

Fed Rates

Current pricing for a 0.25% interest rate hike in November stands at 26%, while pricing for a December rate hike stands at 45%. 

The SPDR

Gold holdings at the SPDR Gold Trust rose 1.44 tonnes yesterday to a total of 875.08 tonnes, the highest in a week. 

Euro fell in European trade against a basket of major rivals, sharpening losses for the second day and plumbing a ten-month trough amid concerns of a widening interest rate gap between Europe and the US.

Inflationary concerns receded recently in Europe, reducing chances for additional European interest rate hikes, while a spate of strong US data and remarks from Fed officials bolstered the case for a US interest rate hike before the year end. 

EUR/USD

EUR/USD fell 0.2% to 1.0460, the lowest since December 2022, with a session-high at 1.0482, after losing 0.9% yesterday, resuming losses and a two-day hiatus, following strong US data. 

European Rates

Recent data showed Euro zone inflation rose by the slowest pace in two years last month, reducing inflationary pressures on ECB policymakers.

Such data bolstered the case for no change in policies in Europe this year after a rate hike in September. 

US Rates

US services data showed the vital sector is slowing approaching a recovery as demand improves. 

Such data showcases the strength and flexibility of the US economy despite higher US interest rates. 

Such data bolstered the case for another 0.25% Fed interest rate hike at either the October or December policy meetings. 

Interest Rate Gap

The current US-Europe interest rate gap stands at 100 basis points, the lowest since May 2022, and is expected to rise once more to 125 basis points before the year end in favor of the US, bolstering dollar's standing. 

Copper prices fell on Monday and gave up earlier gains today as the US government barely managed to avoid another partial shutdown. 

Copper prices rose in a calm session today as Asian markets closed while investors breathed a sigh of relief as the US government avoided a shutdown. 

Copper three-month futures at the London Exchange rose 0.7% to $8326 a tonne , while nickel added 1.3% to $18930, while lead rallied 0.5%, as zinc rose 0.7% to $2668. 

Aluminium rose 0.8% at the London Exchange to $2366, while tin rose 0.1% to $23,955. 

Congress passed a bill for temporarily financing the government and avoiding a shutdown, boosting risk appetite. 

Dollar strengthened in the Asian trade but dipped in European trade, underlining dollar-denominated minerals. 

Chinese trading was rather timid today due to the ongoing official holidays until October 8. 

Copper is also pressured as inventories increased at the London Exchange by 141% in the last three months to May 2022 highs. 

Copper production in Chile, the world's largest producer spiked 2.7% y/y in August to 434206 tonnes. 

Nick inventories also rose in the London Exchange to April levels, alongside tin and lead inventories.

Otherwise, the dollar index rose 0.6% to 106.8, with a session-high at 106.9, and a low at 106.04.

Copper futures due in December fell 2.8% as of 16:54 GMT in American trade to $3.63 a pound.

International benchmark Brent fell in European trade on Monday, extending losses for the third straight session and almost hitting two-week lows on renewed concerns about Chinese demand. 

Recent data showed major Chinese sectors slowed down in September as the economy continues to struggle.

Brent Price

Brent prices fell 0.5% to $91.62 a barrel, after losing 1.1% on Friday, the second loss in a row as the dollar mounts pressures while risk appetite wanes.

Last September, Brent rallied 6.1%, the fourth monthly profit in a row amid concerns about extreme shortages after Saudi Arabia and Russia decided to extend their voluntary production cuts until the end of the year.

Chinese Demand 

Recent Chinese data once again showed the economy is slowing down considerably despite recent official efforts to prop up the economy.

China's manufacturing PMI fell to 50.6 in September from 51.0 in August.

The services PMI index slid to 50.2 in September from 51.8 in August.

Analysts point to the growing complexity of the Chinese economic landscape , and the necessity for authorities to intervene once more to prop up the economy.