Gold prices have largely declined hitting its lowest level over one week

Gold prices have largely declined at European market on Tuesday, hitting its lowest level over one week, pressured by the increase of short-term and long-term US bond yields, which are backed by strong prospects of raising US interest rates at the middle of the coming month.

Gold prices fell 0.4% as of 09:55 GMT to trade at $ 1273.20 an ounce from the opening level of $ 1278.15 and recorded a high of $ 1278.23 and a low of $ 1270.00 since current November 6.

Gold prices have risen by about 0.2% yesterday, being one of breathtaking moves, after a 0.7% loss on Friday, which was the biggest daily loss since October 26, driven by a 10-year jump in US bond yields.

US 2-year bond yields are trading near the highest level over nine years, which has been reached on Monday. Yields of 10-year bonds have risen one basis points to 2.40% near a seven-month high.

A survey done by the Federal Reserve Bank of New York on inflation expectations in the country showed that the inflation has risen in past October, hitting its highest level over six months, which comes in favor of signs of recovery of inflation rate, and in favor of the possibility of raising US interest rates for the third time this year during Mid of next month.

Federal Reserve member, Patrick Harker, said on Monday that he expected interest rates to be risen next month, despite the bank’s caution about the country’s inflation rate, and assured the central bank needed to get ready for any future economic shock.

In order to re-evaluate the inflation pace in the US, investors keep an eye on PPI data of October, which would issue later today. The rise in these data will confirm the continued recovery of the inflation rate. The interest rates hike will be confirmed by the middle of next month.

Gold holdings with the SPDR Gold Trust Fund, the world’s largest gold-backed fund, rose yesterday by 0.3 metric tons in its first daily increase since October 9th to a total of 843.39 metric tons.