Dollar Strength Pulls Gold to Two-Month Low Ahead of Fed Minutes

Gold fell 1.3 percent to $4,107.88 an ounce by 11:43 a.m. New York time, its lowest level recorded since August 5, as a rising dollar and U.S. Treasury yields pressured the yellow metal ahead of the release of the Fed meeting minutes. December delivery futures fell 1.3 percent to $4,133.30.

The dollar jumped by nearly 0.5 percent, and the 10-year Treasury yield rose 3.8 basis points to 5.30 percent, while the 30-year bond yield climbed 4.9 basis points to 5.69 percent, both marking their highest levels since 2002. This raised the cost of holding non-yielding gold and drove investors toward debt instruments.

The Dollar Index rose 0.48 percent to 102.32, while silver dropped 2.73 percent, and platinum and palladium lost more than 2 percent each. Peter Grant of "Zaner Metals" stated that official demand for gold represents the "main supporting factor" for prices at this stage.

Market pricing showed an 86 percent probability of an interest rate hike in December, with traders awaiting the minutes of the Federal Open Market Committee meeting for signals regarding the path of monetary policy. Despite the decline, gold remained close to historic highs, recording $4,109.80 an ounce, down $54.50 over the full session.

What Do These Terms Mean?

Ounce: The unit of weight in which gold is priced globally, equal to approximately 31.1 grams.

Basis Point: A small unit of measurement for interest rates or yields; 100 basis points equal 1 percent.

Dollar Index: A measure of the dollar's value against a basket of major currencies; its rise makes gold more expensive for holders of other currencies.

Fed Minutes: A document published by the Federal Reserve three weeks after each meeting, revealing details of the discussion and the reasons behind the interest rate decision.