Investor sentiment is currently in favor of the dollar, driven by the resilience of the US economy and speculation surrounding a mild monetary policy easing in the coming months.
Economic data and interest on government bonds increase the appeal of the dollar
The dollar’s recent strength is being supported by rising Treasury yields, with the 10-year bond climbing above 4.2%. According to CME Group’s FedWatch Tool, traders are pricing in a 25 basis point rate cut at the Fed’s November meeting, a shift from previous expectations of more aggressive easing.
Moreover, economic data has reinforced this view: September durable goods orders fell modestly by 0.8%, less than expected, while non-transport orders rose 0.4%.
The University of Michigan’s Consumer Sentiment Index reached a six-month high of 70.5 in October, indicating steady consumer sentiment amid challenging economic conditions.
“Higher interest rates reduce the appeal of gold,” notes Tim Waterer, chief market analyst at KCM Trade. He emphasizes that investors prefer the dollar as it gains strength on resilient US economic fundamentals.
Market warning due to US elections and tensions in the Middle East
As the dollar continues to rise, ongoing geopolitical tensions and the upcoming US election are providing additional support for the gold price, with many investors keeping a close eye on these factors for potential shifts.