Shine Trader Limited reports:
Gold prices suffered their biggest drop in more than a month on Tuesday as the dollar strengthened after the U.S. Labor Day holiday and inflation-adjusted yields rose.
The Bloomberg dollar spot index rose for a second day, helped by a rise in Treasury yields. The jump in US yields following Friday’s weaker-than-expected jobs report pushed up real interest rates and capped the upside for non-interest-bearing gold.
Bart Melek, global head of commodity strategy at TD Securities in New York, said “the market is dealing with liquidity concerns” given that the European Central Bank may be preparing to withdraw its stimulus and the Fed may start reducing its size later this year.
In one minute, 5,273 contracts worth $952 million were traded on COMEX’s most active gold futures contract. Spot gold fell $10 in the short term, missing the round $1,800 mark for the first time since August 27 and down nearly $30 from its session high.
Then, at 22:04 and 22:15 Beijing time on September 7, the COMEX most active gold futures contract traded 3,889 and 2,227 trades in one minute respectively, with a total value of $700 million and $400 million contracts. Gold fell as low as around $1,792, down about $35 from its session high.
Meanwhile, Forexlive notes that 10-year Treasury yields have continued to rise, pushing the dollar higher. The 10-year yield breached its 200-day moving average on Tuesday and is now moving through a double top of 1.379% since August. The mid-July high of 1.42% and 100-dma of 1.44% are in play. The dollar index.DXY rose above 92.50 in midday trading on Wall Street, breaking intraday highs since Last Wednesday, September 1. It was up nearly 0.6 percent on the day and further off an intraday low since August 4 set on Friday when it fell below 92.