Gold Slides Nearly 4%; Oil Rises and Treasury Yields Hit Multi-Year Highs

Market Wrap-Up: Gold Falls amid Higher Oil Prices and Treasury Yields

Gold prices fell as much as 4% during the 28 September session, reaching around $4,111 an ounce, as higher oil prices, rising Treasury yields, and expectations of further Federal Reserve rate increases weighed on bullion.

The US dollar opened the week slightly higher, extending its recent advance. The DXY remained above 101.00, supported by continued increases in US Treasury yields across maturities, while renewed tensions in the Middle East also supported the dollar.

US equities declined in the 28 September session as higher Treasury yields weighed stocks. The Dow Jones Industrial Average fell 347.11 points, or 0.67%, to 51,481.51, while the S&P 500 declined 0.77% to 7,683.69, and the Nasdaq Composite fell 0.92% to 26,820.38.

The Dow Jones briefly fell more than 400 points, and the S&P 500 lost around 1% at the session low. Boeing shares fell nearly 7% after the US Federal Aviation Administration said it would not certify the company’s 737 MAX 10 until it had completed an assessment of a new software issue.

Treasury yields remained elevated, with the 10-year yield moving above 5.2% and the 30-year yield above 5.5%. Several major technology stocks also declined, including AMD, Micron Technology, Amazon, Microsoft, and Meta Platforms.

Nvidia moved against the broader trend, gaining 1.7% after announcing plans to buy back an additional $150 billions of shares, taking the total programme to $235 billion.

Oil prices retreated from their intraday highs after reports that Saudi Arabia had resumed operations on the East-West pipeline following repairs. Brent settled 96 cents higher at $105.28 a barrel after reaching $108.83, while WTI rose 19 cents to $92.60 after touching $96.54. 

Markets will now focus on CB Consumer Confidence and JOLTS Job Openings, with the releases providing further clues to US consumer sentiment and labour-market conditions. 

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DXY:

Key takeaway:

• DXY remains above 101.00, maintaining its recent upward momentum.
• US economic data and rate expectations remain key drivers for the dollar.

Technical Outlook:

• Daily Bias: Bullish
• Support: 100.98
• Resistance: 101.39

Gold:

Key takeaway:

• Gold remains under pressure after its latest sharp decline.
• Shifts in US rate expectations remain an important factor for bullion.

Technical Outlook:

• Daily Bias: Bearish
• Support: 4,111
• Resistance: 4,172

Oil:

Key takeaway:

• Oil remains sensitive to changing supply conditions and developments around US-Iran talks.
• The market continues to assess the balance between supply risks and restored Saudi flows.

Technical Outlook:

• Daily Bias: Neutral
• Support: 91.23
• Resistance: 95.70

Calendar Watch

• CB Consumer Confidence: The September consumer confidence report will provide an indication of household sentiment and expectations around economic conditions.
• JOLTS Job Openings: The August JOLTS report will provide an update on US job vacancies and labour-market conditions.

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