The gold price continued its September decline into October. ADP announced a sudden drop in the hiring of new employees. This brought an end, if only temporarily, to the longest losing streak the precious metal has experienced since 2017.
It is interesting to note that the gold price drop was due to a similar event from nearly seven years earlier. The demand for gold was reduced by higher interest rate. The Fed had to stop their rate hike campaign and gold prices rose to more than twice what they were in 2018. Can history be repeated?
Reasons for moving
Treasury yields continued to increase over the past few weeks, despite the Fed’s claim that it was nearly done raising rates. They were so high, they reached a 16-year peak earlier this week. Fed officials began commenting. Mary Daly, the San Francisco Fed president, attracted attention on Thursday for saying that rising yields are equivalent to a quarter point rate hike. This could indicate that the Fed may not tighten monetary policy in full this year.
Gold prices are affected by the strength of the dollar. The dollar is the currency that gold is priced with.