Investing.com - As Tuesday's trading session unfolds, gold prices remain under pressure due to the escalating strength of the US Dollar. This upward movement is fueled by an increase in Treasury yields.
The entire metals sector is experiencing a slump, with the stronger Dollar and dwindling desire for riskier growth-focused assets acting as key deterrents.
Industrial metals are bearing the brunt more than their golden counterpart as concerns over China’s economic outlook intensify.
Last week's weaker-than-expected economic data from China has been further exacerbated by property giants Country Garden (HK:2007) and Sino-Ocean (HK:3377) defaulting on debt payments.
Country Garden failed to make its expected coupon payments in US Dollars last week, leading to suspended trading of its domestic debt this week along with Ocean Sino.
Investors are eagerly awaiting decisive measures from authorities to mitigate these economic uncertainties.
Today saw The People's Bank of China (PBOC) set a stronger Yuan value at 7.1768 per USD while also decreasing the medium-term lending facility rate from 2.65% down to 2.50%.
Meanwhile, there has been notable activity surrounding benchmark ten-year treasury notes which have skyrocketed above 4.2%, marking a first since November last year.
Market speculation now suggests that we're nearing the end of the Federal Reserve tightening cycle leading to more stability within treasury curves.
The two-year bond inches closer to reaching a peak again at around 5% previously seen last month which seems supportive for DXY (USD) index performance meanwhile increasing volatility among gold traders hinting at potential price shifts ahead.
The CBOE Gold Volatility index provides an estimation similar to the CBOE Volatility Index index used for S&P500 but is specifically designed for tracking implied volatility related to gold prices.
Looking forward into future market conditions it appears that despite facing adverse circumstances thus far precious metal markets have managed reasonable resilience although continuation may lead them towards more challenges ahead.