Gold prices tumbled by more than 2 percent, settling at $2,400 per ounce by the end of last week’s trading. This decline followed profit-taking following gold reached a peak of $2,480 per ounce during mid-week trading.
A specialized report released by Dar Al Sabayek on Sunday indicated that gold prices were negatively impacted by the strengthening US dollar. The US dollar index climbed to 104.3 points once morest other major currencies.
The report further stated that yields on 10-year US Treasury bonds surged to 4.21 percent. This rise was fueled by growing speculation that the Republican Party, favoring lower interest rates, may win the upcoming US presidential elections.
The report explained that August gold futures prices declined by 2.35 percent, closing at $2,399 per ounce. This represented a weekly loss of 0.9 percent, ending a three-week streak of gains.
The report mentioned that investors and analysts anticipate the US Federal Reserve to maintain interest rates at its upcoming meeting in late July. However, expectations are rising for a 25 basis point interest rate cut at the September meeting.
The report highlighted that this week in the United States will witness the release of crucial data including the second quarter GDP growth rate and the personal consumption expenditure inflation index. Additionally, data on manufacturing and services purchasing managers’ indices for Australia, Japan, France, and Germany will be released. The report stated that these data releases will directly influence the performance of the precious metals exchange this week.
Focusing on the local market, the Dar Al-Sabayek report indicated that the price of a gram of 24 karat gold reached 23.74 dinars (approximately $71), while 22 karat gold reached 21.7 dinars (approximately $66). Silver closed the week at 328 dinars (approximately $1,075) per kilogram
Gold Prices Plunge: Profit-Taking and Strong Dollar Weigh Down Precious Metal
Gold prices experienced a significant decline last week, dropping by over 2% to close at $2,400 an ounce. This downturn followed a surge to a peak of $2,480 an ounce mid-week, attributed to profit-taking by investors. The US dollar’s recovery played a key role in this price dip.
Factors Influencing Gold Price Drop
- US Dollar Strength: The US dollar index climbed to 104.3 points once morest other major currencies, putting pressure on gold prices. A stronger dollar makes gold more expensive for buyers holding other currencies, thus dampening demand.
- Rising US Treasury Yields: Yields on 10-year US Treasury bonds surged to 4.21%, indicating growing investor confidence in the US economy. This rise in yields can make gold less appealing as an investment, as it doesn’t offer a return like interest-bearing bonds.
- Speculation on Republican Victory: Speculation surrounding the Republican Party’s potential win in the upcoming US presidential elections further fueled the increase in bond yields. The Republicans generally advocate for lower interest rates, which can bolster economic growth and potentially reduce demand for safe-haven assets like gold.
Gold Futures Follow Downward Trend
Gold futures for August delivery also mirrored the price decline, falling by 2.35% to $2,399 per ounce. This drop marked a weekly loss of 0.9% following three consecutive weeks of gains. The downward trajectory reflects the current market sentiment and the underlying factors influencing gold prices.
Interest Rate Expectations and Economic Data
Market participants anticipate the US Federal Reserve (the central bank) to maintain interest rates at their current level during its next meeting in late July. However, expectations are rising for a 25 basis point cut in interest rates at the September meeting. This future possibility might influence gold prices in the coming weeks.
Key economic data releases this week in the US include the second-quarter GDP growth rate and the personal consumption expenditure inflation index. Additionally, data on the manufacturing and services purchasing managers index for Australia, Japan, France, and Germany will be closely watched. These releases might significantly impact the precious metals exchange throughout the week.
Local Gold Market Performance
The Dar Al-Sabayek report highlighted the local gold market’s performance, indicating that the price of a gram of 24 karat gold reached 23.74 dinars (regarding 71 dollars). Meanwhile, 22 karat gold closed at 21.7 dinars (regarding 66 dollars). Silver prices ended the week at 328 dinars (regarding 1075 dollars) per kilogram.
Stay Updated on Market Fluctuations
The gold market is dynamic and subject to various factors influencing its performance. Keeping abreast of economic news, interest rate decisions, and geopolitical developments is essential for investors looking to capitalize on gold price fluctuations. Consult financial experts and reliable resources to make informed investment decisions.
