Gold Holds Near $4,290 as Five-Year U.S. Yield Tops 5%

Spot gold traded at $4,290.29 per ounce on September 23. The price held steady after a 1.7% drop in the previous session.

Investors remain cautious due to fears of further Federal Reserve rate hikes. Rising oil prices and strong U.S. economic data drive these concerns.

Treasury yields reach two-decade highs

U.S. Treasury yields climbed to their highest levels in about 20 years. Strong economic data and weak Treasury auctions pushed rates higher.

The five-year Treasury yield rose above 5% for the first time since 2007. Higher interest rates make gold less attractive to investors.

Economic data signals rapid growth

U.S. economic activity expanded at the fastest pace in more than five years. The S&P Global composite purchasing managers index hit 58.4.

This September reading is the highest since July 2021. Gains in new orders and employment drove the increase across sectors.

Market prices in further hikes

Interest-rate swaps price in at least three more rate hikes by April next year. Federal Reserve Governor Michael Barr said increases are likely needed.

Gold has fallen about 20% since the U.S.-Iran war began in late February. Spot silver also dropped 0.2% to $64.31 per ounce.