A gold market under pressure
THE gold price saw a stabilization on Thursday after a notable fall, reaching their lowest level in two weeks during the previous session. THE investors are scrutinizing upcoming U.S. inflation data, hoping to discern the Federal Reserve’s intentions regarding future interest rate adjustments.
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Stagnation and decline in futures
Spot gold was steady at $2,299.55 an ounce at 0255 GMT. On Wednesday, bullion plunged to its lowest level since June 10. Meanwhile, futures contracts US gold prices recorded a slight decline of 0.1%, stabilizing at $2,310.20.
Today, the price of a gram of 18-carat gold is estimated at €69.74 (06/27/2024) (prices constantly changing).
A strong dollar, an expensive bullion
The U.S. dollar, near an eight-week high, is making bullion more expensive for foreign currency holders. At the same time, the 10-year benchmark yields remained strong, contributing to this dynamic.
Market analysis
“The rise of the US dollar, accompanied by a rise in bond yields, has left the price of gold swimming against the tide,” explained the chief market analyst at KCM Trade.
Federal Reserve Outlook
On Wednesday, the Fed governor reaffirmed his position that “inflation will continue to fall with the policy rate unchanged” and that rate reductions will eventually be appropriate if inflation approaches 2% on a sustained basis.
Investor expectations
Investors are impatiently awaiting gross domestic product estimates US first quarter, forecast at 1230 GMT, along with US inflation data personal consumption expenditure (PCE) this Friday.
“If the PCE index results leave financial markets pessimistic about the date of the Fed’s first interest rate cut, gold could fall back towards the $2,270 level,” said one analyst.
Protection against inflation called into question
Although gold is traditionally considered a hedge against inflation, rising interest rates increase the opportunity cost of holding this asset without yield.
Geopolitical and economic factors
“Gold prices remain caught in a tug of war between a less dovish Fed and elevated levels of geopolitical tension,” BMI analysts said.
They predict that increased risk sentiment, as the global economy recovers in the latter part of the decade, will be the main driver of lower gold prices in the long term.
Other precious metals
Spot silver edged down 0.1 percent to $28.74. Platinum fell 0.3%, settling at $1,007.33, while palladium rose 0.2% to $930.39.
In summary, investors remain attentive to upcoming economic and geopolitical developments, which will continue to play a crucial role in the evolution of precious metal prices.
