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U.S. dollar, U.S. Treasury yields rise as economic data boosts expectations the Fed will continue to aggressively raise interest rates
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Gold prices fell on Wednesday morning as the U.S. dollar and U.S. Treasury yields rose after economic data boosted expectations that the Federal Reserve will continue to aggressively raise interest rates.
Spot gold was down 0.58% at $1,693.66 an ounce at 9.10am UAE time.
In the United Arab Emirates, 24K gold fell by AED1.75 to AED205.0 per gram at the open on Wednesday. Likewise, the prices of 22K, 21K and 18K have dropped to Dh192.75, Dh183.75 and Dh157.5 per gram respectively.
Gold is back in danger territory as global bond yields soar, said Edward Moya, senior market analyst at Oanda.
“The U.S. economy is looking pretty good, which has many traders starting to wonder if we’ve seen yields peak. If the bond market sell-off is the main theme of the trading week, gold is in trouble here. Fixed income is flooded with Corporate bond issuance, central banks now appear to be aggressively raising rates ahead of schedule. If gold falls below the $1,690 level, it could quickly turn ugly as there isn’t much support until $1,650,” Moya said.
Gold prices were lower in Asia-Pacific trade, extending overnight losses as the dollar and U.S. Treasury yields climbed, DailyFx analyst Thomas Westwater said.
“The market is pricing in the Fed, which appears poised to continue tightening through rate hikes and quantitative easing, even at the expense of economic growth,” he said.
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