Early Gains Reversed On Tuesday As USD & US Yields Moved Higher

Gold is little changed in the Asia-Pac session, after closing -0.1% at $1931.36 on Tuesday. The precious metal initially saw gains but retreated as the USD index regained momentum during the latter part of the New York session, coinciding with the ongoing upward trend in US Treasury yields.

• US Treasury yields pushed to their highest levels since 2007 ahead of the FOMC decision later today. The 2-year yield hit 5.109%, while the 10-year saw 4.3647%. Hotter-than-anticipated inflation data in Canada for the second straight month and rising oil prices added to global concerns about resurgent price pressures. Canadian yields surged, with the 10-year yield rising 12bps to 3.86%.
• Traders expect the Fed to keep rates on hold with a tightening bias. The median of analysts’ expectations for the Fed’s September Dot Plot rates suggests that the central expectation is for no changes from June’s projections: 5.6% for 2023, 4.6% for 2024, 3.4% for 2025, with the new entry for 2026 at 2.6%, and the Longer-Run rate at 2.5%.
• According to MNI’s technicals team, Tuesday’s high of $1937.44 came close to resistance at $1939.0 (Sep 5 high).