Global gold price falls for the fifth consecutive session in Thursday’s trading, recording their lowest level in eight weeks. Prices were negatively affected by the strength of the US dollar and the rise in US bond yields. Uncertainty about the speed of interest rate cuts by the US Federal Reserve also contributed to the pressure on the precious metal.
The US dollar rises and yields affect gold
The US dollar index witnessed a significant rise to reach its highest level in 2024. This increase in the value of the dollar made gold more expensive for buyers from outside the United States. US bond yields also witnessed a significant rise, reaching their highest level since last July, which added additional pressure on gold.
Expert analysis: The impact of economic factors on the yellow metal
The financial markets analyst commented on the decline in gold, saying: “At the moment, gold is greatly influenced by the US dollar and bond yields. Therefore, the yellow metal is exposed to downward pressure in the short term.”
The strength of the dollar and higher yields are attracting investors to assets that offer higher returns, which weakens demand for gold, which is considered a safe haven. Consequently, the price of the precious metal has declined as demand for it has decreased in light of the current economic conditions.
Factors Contributing to the Decline in Gold Prices
There are many reasons that have led to the decline in gold prices recently.
but the main factor remains major economic movements such as rising interest rates and the appreciation of the dollar. With the Federal Reserve moving towards a tighter monetary policy, gold is suffering from a lack of support that it had previously enjoyed. As yields on US bonds continue to rise, pressure on gold prices is increasing.
Inflation and its impact on gold
According to economic data released on Wednesday, consumer prices in the United States rose 0.2% in October, bringing the annual inflation rate to 2.6%. This slowed the rise in inflation in recent months compared to the previous month, which recorded 2.4% in September. Although gold is considered a safe haven against inflation, rising interest rates reduce the appeal of gold. Gold does not provide returns, and therefore becomes less attractive in light of the high yields on bonds.
Inflation concerns affect the decisions of the Federal Reserve
While some analysts expect the Federal Reserve to start cutting interest rates next month, they indicate that monetary policy may remain tight in the future. Federal Reserve officials remain cautious about cutting interest rates quickly, due to the potential risks posed by inflation. These concerns make markets expect pressure on gold prices to continue in the coming period. Mixed expectations on inflation and interest rates in the United States.
While Alberto Musallam, President of the Federal Reserve Bank of St. Louis, expects inflation to gradually decline, Lujan, President of the Federal Reserve Bank of Dallas, warned against the effects of excessive interest rate cuts.
Anticipating Important Economic Data
Currently, investors are awaiting the release of the Producer Price Index (PPI) and weekly jobless claims data in the United States. These data are scheduled to be published today at 16:30 Riyadh time. These data are expected to carry additional signals about the path of the US economy.
as they are seen as leading indicators of the state of inflation and the labor market in the country.
The impact of the Fed Chairman’s remarks on the markets
On the other hand, investors are also looking forward to the statements of Jerome Powell, Chairman of the Federal Reserve, which are scheduled to be delivered later today.
Preparing for future impacts on gold and financial markets
All of these developments come at a sensitive time for financial markets, as concerns about potential economic volatility grow. Investors in gold and stock markets are closely monitoring these data and the Fed’s hints.
as these factors could significantly impact their investment decisions in the coming days.
In light of these factors, some experts expect gold prices to continue to decline in the short term if the dollar continues to strengthen and yields continue to rise. However, the trend may change in the event of changes in interest rates or in the event of increased economic concerns. However, gold is still considered a hedge against inflation in some cases.
but it is struggling to maintain its appeal under current monetary policy.
Gold Futures Settlement
At settlement, gold futures for December delivery fell 0.75%, or $19.8, to $2,586.50 per ounce. Prices had touched $2,625 earlier in the session, before suffering a significant decline in light of economic pressures.
Spot Gold and Futures
In spot markets, gold fell 0.72% to $2,554 per ounce. Gold futures also fell 1.05% to $2,559 per ounce. This decline came in parallel with the US dollar index rising 0.18% to 106.57 points, making gold more expensive for buyers outside the United States.
The impact of the dollar on precious metals
Other precious metals were affected by the same pressures resulting from the rise in the dollar. Silver recorded a decline of 0.5% to reach $30.19 per ounce, its lowest level since September 19. Platinum prices also witnessed a decline of 0.6% to record $931.74, while palladium decreased by 0.3% to reach $930.50.
Gold prices continue to be pressured by the rise in the dollar and bond yields. With these economic factors continuing, many analysts expect the yellow metal prices to continue to decline in the coming period.
