The drop in gold prices on Tuesday was attributed to the strengthening of the US dollar and the rise in Treasury yields. Gold for February delivery experienced a decline of US$13.70, reaching US$2,037.90 per ounce.
The increase in the ICE dollar index by 0.85 points to 103.25 played a role in the decline of gold prices. This movement occurred as trading resumed after the Martin Luther King Day holiday. Despite the lack of significant economic data influencing the market, the dollar and yields were higher.
Investors were particularly focused on comments from Federal Reserve governor Christopher Waller, anticipating signals regarding the central bank’s policy committee’s intentions regarding interest rates for the year. The market sentiment seems to be influenced by speculation about potential reductions in interest rates.
Additionally, the higher Treasury yields negatively impacted gold prices, as gold typically does not offer interest. The US two-year note was reported to be paying 4.216%, marking an increase of 8.0 basis points. Simultaneously, the yield on the 10-year note rose by 7.5 points to 4.018%. This rise in yields is considered bearish for gold, contributing to its weakened position in the market.