2023-10-10 21:54:16
Hossam Abdelnaby (Abu Dhabi)
Financial analysts have confirmed that the current rises in gold prices may be “temporary,” explaining that there are factors that will have the greatest influence in the long term, the most important of which are US interest rates.
They told Al-Ittihad: It is necessary to note that the rises that occurred during the past days came following a series of sharp losses for gold, which pushed it to the lowest levels since last March, indicating that although safe assets, including gold, may become… More attractive in times of turmoil, however, volatility in gold prices is likely to continue, as monetary policy will continue to play an important role in determining market direction.
Gold prices rose during trading yesterday, following achieving noticeable gains due to the increasing uncertainty in the market, and the impact of cautious statements issued by senior US Federal Reserve officials on the dollar and bond yields.
Gold futures rose by 0.25% to $1,869 per ounce, while spot gold contracts fell by 0.3% to $1,855 per ounce.
Gold prices recorded a jump of regarding 1.6% on Monday, the largest daily jump in five months
Temporary highs
Samer Hassan, a market analyst and member of the market research department in the Middle East at XS.com, said: Gold prices recorded gains of regarding 1% at the beginning of the new week’s trading, as spot prices rose to the level of $1854 per ounce, and gold futures also rose in… The COMEX exchange also reached the level of $1868 per ounce, at the peak of Monday’s rises, explaining that these rises in the gold markets came with the sudden escalation of the situation in the Middle East on Saturday morning.
Hassan suggested that the rises in gold prices will be “temporary” and will not last long as long as the current conditions remain, especially since the rises that occurred during the past days came following a series of sharp losses for gold, which pushed it to the lowest levels since last March, following a series of data. From the US economy, which was fueling market expectations that the Federal Reserve would raise interest rates for a final time before the end of this year.
He added: Although these expectations are still weak and unlikely, gold has been continuing to decline throughout the past week, so even if we do not witness another interest rate hike, the markets expect it to maintain its record high levels for a longer period than expected. Over the next year, with continued inflationary pressures and labor market flexibility.
Hassan pointed out that the arrival of interest rates to their peak may confirm to the markets that the bond market has reached its final bottom, and that it is time to enter and invest in American bonds, which enjoy returns that we have not seen since 2007, and this in turn may put more pressure on gold in the future. , even though interest rates have stopped rising.
He stated that the continuation of inflows into bond traded funds last September to regarding $6.7 billion came at the expense of more outflows from gold traded funds, warning of the continuation of net negative flows for the fourth month in a row to two of the largest physical gold funds.
Safe assets
For his part, Wael Makarem, chief market strategist for the Middle East and North Africa at Exness, said: Gold prices made a jump following the outbreak of tensions in the Middle East, with investors wary of risks, stressing that safe assets, including gold , may become more attractive in the meantime, and might see more flows if unrest in the region continues.
Makarem expected the market to witness more fluctuations as events develop, but he suggested that gold prices would remain under pressure in general, given the high levels of interest rates and bond yields, as monetary policy might continue to play an important role in the market’s direction.
An incentive for recovery
Kyle Rodda, a financial markets analyst at Capital.com, said that the events in the Middle East provided an incentive for gold to recover, but in the long term, US interest rates will be the biggest influence, indicating that gold may be seen as a safe investment in times of… Economic uncertainty, but since it does not generate a return, it loses its appeal when interest rates rise.
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