Gold Jumps $40 as Treasury Yields Drop and Dollar Declines

Gold rose nearly $40 during trading on October 15, as U.S. Treasury yields dropped and the dollar fell against most major currencies, at a time when Asian stocks suffered sharp losses, according to the "Investing Live" newsletter specializing in Asia-Pacific markets.

The 10-year U.S. Treasury yield came in about 21 basis points below its post-consumer price data high, diminishing the dollar's appeal and reviving demand for the non-yielding yellow metal. The dollar declined against most major currencies, making holding gold cheaper for holders of those currencies.

On monetary policy, Mary Daly, a Federal Reserve Bank president, said another rate hike was "more likely than not," but saw it as unnecessary at the October 27-28 meeting, easing fears of imminent tightening. Meanwhile, Japan's Nikkei index fell over 4%, South Korea's Kospi losses approached 8%, and Bitcoin briefly traded below $81,000.

The decline in the dollar and yields increases gold's appeal for Arab investors who view the metal as a savings haven, as the weakness of the U.S. currency boosts the dollar price of the metal and supports demand for safe havens during market volatility.

What do these terms mean?

Treasury yields: The interest earned by holders of U.S. government bonds, and their rise increases the attractiveness of bonds compared to gold.

Basis points: A small unit of measurement for interest rates or yields, where 100 basis points equals 1%, used because price changes are often too small to measure directly in percentages.

Federal Reserve: The U.S. central bank responsible for monetary policy, and its interest rate decisions impact global gold prices.

Nikkei Index: The main index of the Tokyo Stock Exchange, measuring the performance of the largest listed Japanese companies.

Bitcoin: The most famous cryptocurrency, followed by investors as an indicator of appetite for high-risk assets.