Overnight, spot precious metals in London traded weaker amid choppy conditions, with the core driver coming from U.S. economic data that reinforced hawkish expectations for the Federal Reserve, while geopolitical events once again pushed crude oil higher. London gold fell 1.71%, and SHFE gold dropped 0.98%.
On the macroeconomic front, the preliminary U.S. S&P Global Composite PMI for September came in above expectations, climbing to 58.4 versus a forecast of 55.3, the highest level since July 2021. The September services PMI rose to 58.7, and the manufacturing PMI jumped to 57, both also beating expectations. The sharp rise in the data stemmed from expanding demand: consumer spending was relatively strong, and AI-related investment heated up. The macroeconomic data reflected strong domestic demand in the economy, and the market worried about sticky inflation, which in turn lifted hawkish expectations for the Federal Reserve.
U.S. Treasury yields rose rapidly, with the 10-year Treasury yield up 14 basis points in a single day, breaking through the 5.00% mark; the 5-year yield rose during the session to its highest level since 2007, while the 30-year yield climbed to a peak since 2004; the dollar strengthened, and capital flowed out of the precious metals market. Combined with Federal Reserve officials continuing to deliver hawkish remarks and the possibility of further rate hikes not being ruled out, gold prices were suppressed in the short term.
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