Gold Today 19th October: gold price slips as yields climb

Where the move happened

Gold started the week firm. It reopened at Friday's $4,166 and climbed through Asian trade to about $4,188 by the London open, close to the day's high of $4,190.

London undid that. The price drifted lower all morning and was back near $4,164 when New York came in, roughly where the week began.

The real damage came in New York. Gold dropped about $14 in the first half hour after Wall Street opened, touched a low of $4,138 in the early afternoon and finished near $4,142. Nicky Shiels of MKS PAMP described the same shape to Bloomberg: gold bid in Asian hours, sold in New York, on thin Monday trading.

Why gold fell

Yields went up. The US 10-year Treasury yield rose about 6 basis points to around 5.14%, FXStreet reported. Inflation-adjusted yields climbed too, helped by a selloff in French government bonds after a weekend of unrest in France. When bonds pay more, gold costs more to hold, which is why gold tends to fall when rates rise.

Oil kept inflation in view. US crude was back above $99 a barrel after Iran's navy said US strikes had hit its Konarak naval base, a report FXStreet credited to Al Jazeera. Expensive fuel feeds the price pressure that keeps Fed hikes on the table, and White House economic adviser Kevin Hassett said inflation was still "needing some work".

The Fed gave gold only a brief lift. Remarks from Fed Chair Kevin Warsh, read as support for holding rates at next week's meeting, helped the Asian rally. Money markets still price about a 17% chance of an October hike and close to 92% for December. TD Securities added that hedge funds cut their bullish Comex bets in the week to 13 October.

Our number

Every one of October's 13 trading days has closed between $4,100 and $4,200, on our data. The band is tight, but the drift beneath it is not. Gold is down 5.3% over the past 30 days,and it sits about 24% below its record close of $5,426 from January.

Our gold technical analysis maps the levels at each edge of that band, and last week's review covers how the hot US inflation data faded.

Up next: what to watch tomorrow

• Tue 20 Oct: the People's Bank of China sets its loan prime rates in the Asian morning, 9 am Beijing time.
• Tue 20 Oct: US housing starts for September from the Census Bureau at 8:30 am New York, with forecasts near 1.30 million, then September state employment and unemployment from the Bureau of Labor Statistics at 10 am.

With no big US data until Thursday's jobless claims, traders will take their lead from Treasury yields and oil on the road to next week's Fed meeting.