2023-05-27 07:27:00
Books – Islam Saeed
Saturday, May 27, 2023 10:27 AM
concluded gold prices Global trading last week declined for the third week in a row, in light of a change in the trends of gold markets in the short term following closing below the support level of $1950 an ounce, in light of a recovery in dollar levels supported by economic data.
Prices have fallen gold Spot prices rose by 1.6% during the past week, to lose more than $30, and gold closes its trading at $1946 an ounce, below the important support level of $1950 an ounce, while it recorded its lowest level in 9 weeks at $1936 an ounce, according to the technical analysis of the Gold Billion platform.
Since gold recorded its highest historical level at the beginning of this month at $2080 an ounce, it lost more than $130, down by 6.4%, in light of changing market expectations for US interest rates, in addition to the recovery in dollar levels.
The current decline in gold prices came due to changing expectations in the markets regarding US interest rates, starting with the statements of members of the Federal Reserve, which indicated the need for the bank to continue to tighten monetary policy in order to confront coherent inflation in a large way, according to the technical analysis of Gold Billion.
Neil Kashkari, head of the Fed in Minneapolis, stressed that the bank must continue to fight inflation and go with interest at a rate higher than 6% in order to return inflation to the bank’s target at 2%, and the head of the Federal Reserve in St. Louis James Bullard indicated that the labor market is still strong and indicated the need for a rise Interest rate once more at 50 basis points.
Federal Reserve member Christopher Waller stated that the Fed may raise interest rates twice in June and July, indicating that the bank needs to continue monetary tightening, as it is not making sufficient progress in reducing inflation rates.
The minutes of the Federal Reserve’s meeting were issued last week and showed a division among the bank’s members regarding the need to continue raising interest rates to reduce inflation or stabilize them at current rates for a period of time, especially since the US economy showed great economic flexibility in dealing with monetary tightening.
The direct signals from the Bank’s members on the need to raise interest at the next meeting of the Bank helped to change the expectations in the markets, which currently indicate a probability of 58.5% that the Bank will raise the interest rate at the June meeting by 25 basis points.
The statements of the Fed members came in line with the economic data that was issued by the US economy this week, to show the resilience and strength of the US economy in accepting monetary tightening, in addition to the fact that inflation is still very high, especially core inflation related to household sector spending.
The second estimate of US GDP for the first quarter came in better than expected with a growth of 1.3% once morest expectations of 1.1% and compares to the preliminary reading of GDP which also rose by 1.1%.
While the core personal consumption expenditures index increased by 4.7% on an annual basis, compared to the previous reading of 4.6%. This indicator is the Fed’s favorite for measuring inflation, and the reading’s approach of 5% indicates that the bank’s mission to fight inflation is not close to its end.
Expectations of continuing to raise US interest rates had a significant negative impact on gold prices, since gold is an asset that does not provide a return to its holders compared to US bonds that provide a return that increases with the rise in interest rates.
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