Gold prices fell on Wednesday as the dollar climbed higher and bond yields surged, amid bets the Federal Reserve will hold interest rates higher for longer than previously thought to help fight inflation.
The dollar index surged to 106.83, gaining nearly 0.6%.
Gold futures for December ended down $28.90 at $1,890.90 an ounce.
Silver futures for December ended lower by $0.472 at $22.724 an ounce, while Copper futures for December settled lower by $0.0125 at $3.6365 per pound.
"Gold is vulnerable to further downside as higher-for-longer gets even more elevated. The 10-year Treasury yield was expected to run out of steam at 4.50%, but it keeps on rising," says Edward Moya, Senior Market Analyst at OANDA. "Gold could be vulnerable to further technical selling now that Wall Street keeps on seeing a strong dollar, higher real yields, and resilient economic data points that support the case for more Fed tightening," he adds.
In an interview with the Times of India, JPMorgan CEO Jamie Dimon warned investors to prepare for a worst-case scenario where the Fed lifts rates to 7% alongside stagflation.
Minneapolis Federal Reserve President Neel Kashkari also wrote in an essay that there is a 40% chance the Federal Reserve will have to push rates "meaningfully higher" to combat stubborn services inflation.
In U.S. economic news, data released by the Commerce Department showed durable goods orders crept up by 0.2% in August after plunging by a revised 5.6% in July.
The uptick surprised economists, who had expected durable goods orders to fall by 0.5% compared to the 5.2% nosedive that had been reported for the previous month.
Excluding a modest decrease in orders for transportation equipment, durable goods orders rose by 0.4% in August after inching up by a downwardly revised 0.1% in July. Economists had expected ex-transportation orders to edge up by 0.1% compared to the 0.5% increase originally reported for the previous month.
