Gold prices fell on Wednesday as the dollar and treasury yields rose after a stronger-than-expected reading on the US services sector.
The ISM Services PMI for August came in at 54.5, above the consensus forecast of 51.0. This was the highest reading since March 2021 and suggests that the US economy is continuing to grow at a healthy pace.
A stronger dollar makes gold more expensive for foreign investors, while higher treasury yields offer a competing asset class for investors seeking yield. As a result, both factors tend to weigh on gold prices.
The gold price settled at $1,944.20 per ounce on Wednesday, down $8.40 from the previous day.
Looking ahead, gold prices are likely to remain under pressure from the strong dollar and rising treasury yields. However, any signs of a slowdown in the US economy could provide support for gold prices.
Here are some other factors that could affect gold prices in the coming days and weeks:
- The release of US employment data on Friday.
- Any developments in the Russia-Ukraine conflict.
- The outcome of the Federal Reserve’s monetary policy meeting on September 20-21.
Overall, gold prices are expected to remain volatile in the near term. However, the long-term outlook for gold is positive, as the metal is seen as a safe haven asset that can protect investors against inflation and economic uncertainty.