Gold prices fluctuated in a narrow range on Wednesday as a steady rise in the dollar reduced support for gold prices. Gold investor sentiment was supported by the fact that the US Federal Reserve (Fed) may not raise interest rates by 100 basis points next week.
Spot gold fell 0.96% to $1,694.59 an ounce while gold futures lost 1.06% of its value to $1,692.5 an ounce.
Daniel Ghali, head of commodity strategy at TD Securities, commented: “Gold is trading in a narrow range but volume is high. Fed officials have so far been We don’t think it’s possible to raise rates by 100 basis points, but there are still many investors taking advantage of the opportunity to sell before prices fall further.”
Rising interest rates increase the opportunity cost of holding gold, which itself does not yield interest.
The appreciation of the US dollar reduces the attractiveness of gold in the eyes of investors who own other currencies.
Gold prices have had a positive start this week as market expectations about the possibility of the Fed raising interest rates by 1 percentage point fade. However, recently, gold has not been able to attract money in search of safe assets because investors choose USD.
“The conflict in Ukraine has ‘frozen’ the flow of money into gold ETFs. Not only that, the increasingly tough central banks are making gold less attractive,” said Mr. Ghali.
Policymakers from the European Central Bank (ECB) are scheduled to meet on Thursday. Meanwhile, inflation in the UK in June 2022 reached the highest level in 40 years, so the market expected more on the possibility that the Bank of England will raise the basic interest rate of the pound sterling next month.
David Jones, head of market strategy at Capital Fund, commented: “At the moment, it seems that investors are positioning for gold prices to recover in the range of $1,650-1,700 an ounce.”
In the past week, the gold price has had a very difficult week when the market recalculated the basic interest rate hikes, the USD took away gold’s safe-haven status. In the coming week, analysts still maintain a cautious view that the threshold of $ 1,700 / ounce can still be considered a dangerous level for gold prices.
According to Kitco, “Gold prices fell to an 11-month low as investors sold gold to buy USD as hedging sentiment increased across the markets,” said senior commodity strategist at Kitco. ANZ bank – analysis by Mr. Daniel Hynes.
Closing last week, gold price fell more than 2% and thus recorded the 5th consecutive week of decline, which has not happened in many years. Year-to-date, gold prices have fallen by an estimated 7%. Currently, the price of gold futures delivery in August 2022 is trading at 1,702.5 USD/ounce.
The main factor causing the strong sell-off of more than 40 USD in gold price recently was the US inflation report, according to which, the price index in June 2022 increased by 9.1%, leading to investors raising their prices. Inflation expectations for July 2022.
Source: CafeF
Source: Vietnam Insider