Gold Slips to Multi-Week Low Amid Higher Yields and Firm Dollar

Gold prices fell to their lowest in more than two weeks on Wednesday, pressured by higher US Treasury yields and a firmer dollar, as investors awaited US jobs data for clues on the interest-rate path. Spot gold steadied at $4,333.49 per ounce after hitting its lowest since August 14 earlier in the session, according to The Economic Times. Prices were trading below their 200-day moving average, a closely watched technical level.

The Straits Times reported that gold fell on September 2 to its lowest in more than three weeks, with spot gold down 0.6 per cent at US$4,304.01 per ounce by 8.17am Singapore time, its lowest since August 7. Prices were headed for a fourth straight session of losses and remained below the 200-day moving average.

US gold futures for December delivery fell 0.4% to $4,380.40, as reported by The Economic Times, while The Straits Times cited a 1 per cent decline to US$4,350.80.

Middle East Conflict and Inflation Concerns Drive Yields

The escalation in the Middle East conflict has been a key driver behind the rise in Treasury yields and the subsequent pressure on gold. The US launched a barrage of airstrikes on Iran on Tuesday, prompting Iranian retaliation in the most serious escalation in weeks in the conflict that has driven up global energy prices, according to The Economic Times. The Straits Times reported that the US launched a barrage of airstrikes against Iran on September 1, with oil prices rising for a third straight session, while US Treasury yields advanced.

"A rebound in oil prices after renewed US-Iran tensions added to inflation concerns. A pricier crude could continue to tighten monetary policy expectations and drive yields higher, limiting any rebound potential for gold," said Bas Kooijman, chief executive officer and asset manager of DHF Capital , as quoted by The Straits Times.

The US dollar held firm, making greenback-priced metals costlier for buyers using other currencies, a factor cited by both outlets. Although gold is seen as an inflation hedge, higher interest rates weigh on its appeal as it offers no yield.

Fed Officials Signal Possible Rate Hikes

Federal Reserve Governor Michael Barr said if inflation does not cool quickly, it will be time for the central bank to raise interest rates, as reported by both The Economic Times and The Straits Times. Last week, Fed Chairman Kevin Warsh nodded to the prospect of a rate hike, according to The Straits Times.

Traders are pricing in a 67 per cent chance of a rate hike at the Federal Reserve's policy meeting in September, according to the CME FedWatch Tool, as reported by The Straits Times.

US Jobs Data in Focus

The ADP employment report is due later in the day, and the more crucial nonfarm payrolls data is due on Friday, according to The Economic Times. The Straits Times reported that the nonfarm payrolls data is due on September 4.

Data showed US job openings increased in July amid a surge in manufacturing vacancies, but weak hiring suggested the labour market remained in a holding pattern, as reported by The Economic Times.

"Softer figures could ease the pressure on gold, while stronger data or more hawkish Fed comments may extend the decline," Kooijman said, as quoted by The Straits Times.

Other Metals

Among other metals, spot silver gained 0.1% to $64.31 per ounce, platinum edged 0.2% lower to $1,736.93, and palladium fell 0.2% to $1,308.25, according to The Economic Times. The Straits Times reported different figures: spot silver lost 1 per cent to US$63.60 per ounce, platinum edged 1 per cent lower to US$1,722.23, and palladium fell 1.4 per cent to US$1,292.21.