![]() The depreciation of the dollar will benefit the price of gold as a safe asset that can store value, allowing each country's money to flow into gold, causing the price of gold to increase, said the firm. "If inflation comes down, this could be a headwind for gold bar and coin investment," she said.Īs the US dollar is a widely used currency and a medium for buying and selling, the currency fluctuates along with gold prices, said Aurora. Investors are advised to stay cautious, said Louise Street, a senior markets analyst at the council. Though disinflation is projected, inflation rates in the global market remain high. The Fed will continue with further rate increases amid a strong US labour market, said Mr Powell. On Feb 2, Fed chairman Jerome Powell told the Economic Club of Washington inflation would significantly decline this year, with the current personal consumption expenditure (PCE) running at 5% before it reaches the central bank's target of 2% next year. In the US, the market expects the Fed to start cutting rates in the second half of this year, whereas policy rates in other markets will decline more slowly than in the US. "As the cycle continues, the impact gets smaller," he said.Īnalysts at the council expect monetary policies deployed by central banks across the world to remain tight until at least mid-year. The cycle of US rate hikes has the biggest impact on the gold market and its performance, he said.Īs the US Federal Reserve recently lifted the rate by 0.25% to a range of 4.50% to 4.75%, the highest level since October 2007, the gold market both domestically and globally was affected, but not to the same degree as last year, said Mr Naylor. When US interest rates decline, confidence in the dollar also drops, causing gold to strengthen, said the firm.Īndrew Naylor, regional chief executive for Asia-Pacific (ex-China) at World Gold Council, agreed this is a familiar view. INTEREST RATE POLICYĪccording to Aurora, hiking interest rates signals a stronger dollar, which undermines the price of gold. The price of gold dropped by almost $100 during the first week of February. "Although the price of gold depends primarily on the state of the global economy, there are other variables that also determine price trends, such as interest rates, oil prices, the US dollar, as well as demand and supply," said a report by Thai gold trader and jewellery manufacturer Aurora. Pressured by a stronger dollar and rising US bond yields, gold prices dropped over the past week to touch a new low of $1,827 on Thursday.Īn analysis by MTS Gold Group, a Thai gold trading firm, forecasts prices to stay in a range of $1,820-1,850, depending on US economic data that helps to indicate US interest rate trends. ![]() Prices started to fall significantly in the first week of February. ![]() Spot gold prices moved upward over the past six months with slight volatility to peak at US$1,950 per ounce in January, from $1,700 in September last year, according to data compiled by. In addition to economic and geopolitical uncertainties, factors such as continued weakness in the US dollar, growing recession risks and the high bond-equity correlation make a positive tactical case for gold in 2023, according to the World Gold Council. The outlook for gold remains unclear this year, according to pundits. Gold is perceived as a safe-haven asset, a long-term investment and a hedge against uncertainty in the global economy and geopolitics. Gold is currently trading within a range of $1,840-1,850. ![]()
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