The international gold price will rise, and it will be more supported by three positive factors in the coming year
On Thursday (December 29), international gold prices edged higher as the U.S. dollar index and U.S. bond yields weakened. Market participants are awaiting the upcoming U.S. weekly jobless claims data for its possible impact on the Fed’s rate hike strategy.
At 15:21 Beijing time, spot gold rose 0.13% to $1,806.43 an ounce; the main COMEX gold futures contract fell 0.14% to $1,813.2 an ounce; the U.S. dollar index fell 0.09% to 104.43.
“The unemployment data will be important. If it shows an increase in jobless claims, that should weaken the dollar and support gold,” said Ajay Kedia, director at Kedia Commodities in Mumbai.
US existing home sales data released overnight showed the consequences of the Fed’s interest rate hike. The November figure fell 38.6% year-on-year to the lowest level in 20 years, as transactions fell sharply following the Federal Reserve pushed interest rates higher.
Gold prices have been under pressure for most of this year, hit by rapid interest rate hikes by major central banks. However, gold has rallied nearly $200 from a more than two-year low hit in September on hopes that the Federal Reserve may slow the pace of rate hikes.
After raising interest rates four times in a row by 75 basis points, the Fed cut the pace of rate hikes to 50 basis points in December, while Fed Chairman Jerome Powell emphasized the need to keep interest rates high for a longer period of time to fight inflation. Higher interest rates reduce gold’s anti-inflationary appeal and increase the opportunity cost of holding the asset, since it does not pay interest.
Geopolitical concerns surrounding Russia and Ukraine also supported gold prices. According to foreign reports, according to the latest news from the Ukrainian military, “Russian troops have increased their shelling of the city of Kherson more than six weeks following the Ukrainian army recaptured it, while also putting pressure on the eastern front.” , The Russian side previously stated that it is only feasible to add the four newly added territories that joined the Russian side to the agreement.
Kedia added: “Gold has already priced in the impact of global rate hikes in 2022. Going into 2023, gold will be well supported by geopolitical tensions, recessionary woes and central bank demand. Gold ETFs (exchange-traded funds) are also starting to rise .”
