Gold prices experienced another drop on Thursday, marking the third consecutive day of losses. The decline comes as Treasury yields rise and the U.S. dollar strengthens following Fitch Ratings' decision to downgrade the U.S. credit rating, putting pressure on precious metals.

Price Action

  • Gold prices for December delivery fell by $2.30, or 0.1%, to $1,972 per ounce on Comex.
  • Silver prices for September delivery, on the other hand, gained 19 cents, or 0.8%, reaching $23.69 per ounce.
  • Palladium futures for September declined by $9.80, or 0.8%, settling at $1,232 per ounce, while platinum for October fell by $5.80, or 0.6%, to $924 per ounce.
  • Copper futures, however, increased by 1 cent to $3.85 per pound.

Market Drivers

Although gold prices remain above their late-June lows of around $1,910 per ounce, the yellow metal's shine has slightly dimmed this week. Both a stronger U.S. dollar and rising Treasury yields pose a threat of pushing prices even lower.

Fitch Ratings' decision to downgrade the U.S. credit rating from AAA to AA+ and the Treasury Department's plan to issue $1 trillion in debt during the third quarter have heightened concerns, leading to an increase in bond yields on Thursday.

According to Edward Moya, Senior Market Analyst at OANDA, "Gold prices are falling as the dollar steals all the safe-haven flows that stemmed from the US sovereign downgrade and as Treasury yields surge on rising debt sale expectations."

Bill Ackman, founder of Pershing Square Capital Management, further intensified pressure by declaring a short position on 30-year Treasury bonds.

When Treasury yields rise and the U.S. dollar strengthens, gold tends to face downward pressure. Higher yields provide investors with the opportunity for greater returns elsewhere, while a stronger dollar makes gold more expensive for buyers using other currencies.

The U.S. Economy and Prospects for Growth

Changes in Senior Ranks at UBS

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