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Gold Prices Rise as Soft Dollar Supports Safe-haven Appeal

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Gold prices firmed on Monday, propped up by a subdued dollar and slight retreat in the U.S. Treasury yields, with investors gearing up for a week of speeches from U.S. Federal Reserve policymakers for cues on the central bank’s rate hike path.

Spot gold was up 0.5% at $1,759.06 per ounce, as of 0400 GMT, while U.S. gold futures were up 0.4% at $1,759.00.

While the dollar index softened, the benchmark 10-year Treasury yields eased after hitting their highest since early-July. A weaker dollar offered support to gold prices, making bullion cheaper for holders of other currencies.

“Gold is still looking slightly precarious where it is right now, and it’s probably bouncing off key technical level around $1,750,” IG Market analyst Kyle Rodda said.

“Gold remains an yield story and that yield story is very much tied back to the tapering story.”

A slew of Fed officials are due to speak this week including Chairman Jerome Powell, who will testify this week before Congress on the central bank’s policy response to the pandemic.

“There’ll be a lot of questions being put to Fed speakers about what the dot plots implied last week and weather there is higher risk of heightened inflation going forward and that rate hikes could be coming in the first half of 2022,” Rodda added.

A pair of Federal Reserve policymakers said on Friday they felt the U.S. economy is already in good enough shape for the central bank to begin to withdraw support for the economy.

Gold is often considered a hedge against higher inflation, but a Fed rate hike would increase the opportunity cost of holding gold, which pays no interest.

Investors also kept a close watch on developments in debt-laden property giant China Evergrande saga as the firm missed a payment on offshore bonds last week, with further payment due this week.

Holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, increased 0.1% to 993.52 tonnes on Friday from 992.65 tonnes in the prior session.

Silver rose 0.9% to $22.61 per ounce.

Platinum climbed 1.3% to $994.91, while palladium gained 0.7% to $1,985.32.

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Businessinsider, Nasdaq, Entrepreneur.com, Investorplace, and many more. He has over two decades of experience in global financial markets.

Gold

Gold Hits Record High: Surges to $2,141.79 amid Fed Speculation

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The price of gold soared to an all-time high of $2,141.79 per ounce amid Federal Reserve speculation and global geopolitical tensions.

Bullion’s rapid ascent of as much as 1.3% on Tuesday surpassed its previous record of $2,135.39, set merely three months prior.

The rally in gold, which has seen an over 4% increase since last Thursday, has been fueled by a blend of monetary policy expectations, geopolitical risks, and concerns about equity market corrections.

Market analysts suggest that macro funds and commodity trading advisors contributed significantly to this substantial gain.

Despite the lack of major changes in the Federal Reserve’s monetary policy outlook, gold’s surge surprised many observers with its swiftness and magnitude.

Investors have increasingly sought the precious metal as a hedge against potential market downturns, spurred by signs of a potential stock market correction and the ongoing tensions in various geopolitical hotspots worldwide.

While some uncertainty lingers regarding the timing of the Federal Reserve’s policy pivot, recent indications suggest a growing possibility of rate cuts in the coming months, reinforcing the attractiveness of gold as an investment asset.

The record-breaking surge in gold prices underscores its role as a safe-haven asset amid global economic uncertainties and escalating geopolitical tensions.

As investors seek refuge from market volatility, gold’s allure continues to strengthen, positioning it as a cornerstone of diversified investment portfolios worldwide.

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Gold Edges Upward as Traders Anticipate 2024 Fed Rate Cuts and Weaker US Dollar

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Gold prices experienced a modest uptick as traders set their sights on potential interest rate cuts from the Federal Reserve in 2024 and a weakened US currency.

The precious metal, currently hovering near a record high, is on track to mark its first annual increase in three years.

This surge follows recent data illustrating a softening of US price pressures, reinforcing expectations among investors for multiple rate cuts in the coming year.

A report from the previous week revealed that the Federal Reserve’s preferred measure of underlying inflation showed minimal growth last month, falling short of the policymakers’ 2% target by one measure.

The outlook for gold has become even more optimistic, with swaps markets indicating an over 80% probability of a rate cut by March 2024.

Such a scenario would be particularly bullish for non-interest-bearing assets like gold, despite some central bank officials expressing reservations about the prospect of early easing.

As of 6:33 a.m. London time, gold rose by 0.6% to reach $2,064.45 per ounce, building on a 1.7% gain from the previous week. Bullion had previously closed at a historic high of $2,072.22 on December 1.

Concurrently, the Bloomberg Dollar Spot Index experienced a marginal 0.1% decline. Silver and palladium also saw gains, while platinum maintained a steady position.

This positive momentum suggests that gold continues to be an attractive option for investors seeking a hedge against potential economic uncertainties, especially amid expectations of Federal Reserve intervention in the form of rate cuts in the coming year.

The precious metal’s resilience and upward trajectory underscore its status as a haven asset in times of monetary policy adjustments and currency fluctuations.

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Gold Plunges as Recession Fear Disrupts Global Market

Gold, the world’s leading haven asset, plunged with global uncertainty as investors continued to accumulate Dollars ahead of the inevitable recession.

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Gold, the world’s leading haven asset, plunged with global uncertainty as investors continued to accumulate Dollars ahead of the inevitable recession.

In a recession, cash is the king. Hence, while global investors prefer to save in dollars, especially with borrowing costs on the rise and the Federal Open Market Committee (FOMC) expected to raise interest rates by another 50% to 75% basis points in the month of July.

The U.S Dollar rose to a 20-year high this week and is expected to continue in the near term as I do not see demand for the greenback abating anytime soon given the severity of global risks and uncertainty.

The price of gold dropped from $1814.19 per ounce it peaked on Monday to $1732.14 on Wednesday before slightly paring losses to $1743.74 at 10:36 am Nigerian time on Thursday.

“Gold’s price reaction has been rather muted as it had already started to price in a rising probability of another sharp rate hike in July,” said Suki Cooper, an analyst with Standard Chartered.

“In recent sessions, gold has succumbed to the risk-off sentiment as the dollar has benefited.” Risk-off is when traders and investors reduce their exposure to risk and concentrate on protecting their capital.

According to Tai Wong, an independent metals trader based in New York, rising interest rates means holding the dollar at no additional interest rate is better.

He said, “The hawkish Fed minutes which suggested an ‘even more restrictive stance’ provided no relief for metals markets.”

“While a short-covering rally is possible if payrolls are soft, a lasting upturn (for gold) will require a softer U.S. CPI reading next week. That’s needed to pull the Fed back from launching another massive tightening volley,” Wong added.

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