Gold Prices Drop in Global Market

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​News Desk: Gold prices in the international market have declined due to rising U.S. Treasury bond yields. At the same time, market attention remains focused on Federal Reserve Chairman Kevin Warsh's remarks regarding inflation control. Following the decision to keep interest rates unchanged this week, investors remain uncertain about the Fed's next moves.

​On Thursday (July 30), spot gold prices fell by 0.5 percent to $4,045.59 per ounce as of 1:14 PM Bangladesh Standard Time. The previous day, gold prices had surged by up to 2 percent. Meanwhile, U.S. gold futures for August delivery rose 0.2 percent to trade at $4,043.70.

​A rise in the benchmark 10-year U.S. Treasury note yield has increased the opportunity cost of holding non-yielding assets like gold. As a result, the metal's appeal to investors has somewhat diminished.

​Soni Kumari, an analyst at ANZ, stated that if the market believes inflation fears will drive interest rates higher, Treasury yields will also rise, which is currently exerting downward pressure on gold prices.

​On Wednesday, the Federal Reserve kept interest rates unchanged. Concurrently, Fed Chief Kevin Warsh reaffirmed the central bank's commitment to controlling inflation, creating market uncertainty regarding the Fed's future policy decisions.

​Although gold is typically considered a safe-haven hedge against inflation, demand for it weakens in a high-interest-rate environment because it pays no interest.

​According to CME Group's FedWatch Tool, the probability of an interest rate hike in September is now priced in by the market at 67 percent, down from nearly 81 percent prior to the policy announcement.

​Investors are now awaiting the release of the U.S. Personal Consumption Expenditures (PCE) price index data for June, which is considered one of the Fed's key inflation metrics.

​Meanwhile, geopolitical instability is also impacting the market. The U.S. military stated that it launched fresh strikes in Iran on Wednesday, heightening fears that the five-month-long conflict could expand further to drag in additional Middle Eastern nations.

​According to analysts at TD Securities, with continued upward pressure on oil prices throughout the summer, gold prices could gradually decline toward $3,900 per ounce.

​Among other precious metals, spot silver dropped 0.3 percent to $57.49, while platinum fell 1 percent to $1,595.38. However, palladium rose 0.7 percent to reach $1,255.67.

​Source: Reuters