On October 23, the spot gold price significantly retreated after reaching a historic high, with a daily decline of more than 1%. Analysts pointed out that the easing of tensions in the Middle East, along with the rise in the dollar and U.S. Treasury yields, has diminished investor interest in gold, leading to a substantial drop in prices.
Data shows that spot gold closed on Wednesday down $33.44, falling to $2,715.24 per ounce, after peaking at a historic high of $2,758.45 during the session. Technical analysis indicates that the recent rapid rise in gold prices prompted some investors to take profits. Additionally, the rise in U.S. Treasury yields has limited the upside potential for gold, reducing investors' demand for gold as a safe haven.
The dollar index has recently approached a three-month high, which reduces gold's appeal to holders of non-dollar currencies, while the 10-year U.S. Treasury yield has risen to 4.248%, a new three-month high. Saxo Bank analyst Ole Hansen stated that market uncertainty over the U.S. election results and the pressure from increasing U.S. debt have contributed to further increases in Treasury yields.
Meanwhile, there are widespread concerns in the market that if former President Trump is re-elected, his economic policies could exacerbate inflation risks, further pushing up Treasury yields, which will place ongoing pressure on gold. As the situation in the Middle East eases, prices of commodities like oil have also fallen, with international oil prices dropping to $70.69 per barrel.
Reportedly, Egypt's proposal for a short-term ceasefire agreement with Hamas is being considered by the Israeli government, aimed at paving the way for a larger-scale ceasefire agreement. U.S. Secretary of State Blinken has also arrived in Israel to renew efforts for regional ceasefire negotiations.
