Breaking: Gold nosedives to two-year lows below $1670
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- Gold price tumbles to fresh 2-year lows below the $1670 mark.
- Expectations that the Fed would aggressively continue to tighten weighed on the yellow metal.
- Upbeat US Retail Sales continue to show the strength of the US economy.
Gold price tumbles below the $1700 psychological level, to fresh two-year lows at $1665.30, on expectations that the US Federal Reserve would continue to tighten monetary conditions, sparking a jump in US Treasury yields. Hence, the greenback followed suit but pared earlier gains. At the time of writing, the XAU/USD is trading at around $1666 a troy ounce.
Gold price tumbles on higher US Treasury bond yields
US Treasury yields jumped on expectations that the Fed might hike rates between 75 or 100 bps. The US 2-year bond yield, the most sensitive to interest rate hikes, peaked at 3.84%, while the 10-year benchmark note remained at 3.437%, gaining three bps. Worth noting that the yield curve further inverted, with the spread between 2s and 10s deepening to -0-403%, as market participants expected an aggressive Fed could derail the US economy, tapping it into a recession.
US Retail Sales for August, reported by the US Department of Commerce, surprisingly rose, after dropping a month earlier, with readings increasing 0.3%, exceeding estimates of -0.1%.
In the meantime, US economic data revealed by the Labor Department showed that Initial Jobless Claims for the week ending on September 10 was 213K, decreasing from the previous week's reading and lower than estimates of 227K.
The New York and Philadelphia Fed Manufacturing Indices were reported, showing mixed results. The New York Empire State manufacturing sector improved but remained in contractionary territory, while the Philadelphia Fed index dropped to the contractionary part after rebounding in the August report.
Gold (XAU/USD) Key Technical Levels
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