The spot price of gold fell below the key $1,900 level on Wednesday as the dollar strengthened, putting pressure on the yellow metal. Gold futures on New York’s Comex settled at $1,928.30 per ounce, down 0.4% on the day. Spot gold, which is more closely followed than futures by some gold traders, was also below $1,900 in Wednesday’s late afternoon trade, standing at $1,894.49. The strengthening dollar and concerns about inflation and interest rates weighed on gold prices.
The spot price of gold fell back on Wednesday to under the key $1,900 level critical to those long on the yellow metal as the dollar pressed forth its rebound from 15-month lows. Gold futures’ most-active on New York’s Comex settled at $1,928.30 per ounce, down $6.90, or 0.4%, on the day. The spot price of gold, which is more closely followed than futures by some gold traders, was below the $1,900 in Wednesday’s late afternoon trade in New York.
“Gold’s bearish channel remains intact with the $1900 level remaining a key barrier,” said Ed Moya, analyst at online trading platform OANDA. “If dollar strength remains, gold’s bearish slide may extend towards the $1,882 level.” The spot price of gold falling below $1,900 has raised concerns among investors who view this level as crucial for holding on to long positions. The bearish trend in gold has been influenced by the rebound of the dollar from 15-month lows.
The strength of the dollar has put downward pressure on the price of gold. The dollar, which pits the greenback against a basket of six major currencies, hit a near three-month high at 103.412, after plumbing to 99.22 last month — its lowest since April 2022. The dollar’s rebound has been fueled by robust consumer spending data in the US, which could potentially indicate more inflationary pressures in the coming months. The increasing likelihood of further rate hikes by the Federal Reserve has also contributed to the dollar’s strength and the subsequent decline in gold prices.
Federal Reserve officials expressed concern at their most recent meeting about the pace of inflation and indicated that more rate hikes could be necessary in the future unless conditions change. The minutes from the two-day July meeting revealed that most participants see significant upside risks to inflation, which may require further tightening of monetary policy. The discussion during the meeting resulted in a quarter percentage point rate hike, which is expected to be the last one of this cycle.
The Federal Reserve’s July meeting indicated that the recent rate hike of a quarter percentage point may be the final one of this cycle. The minutes from the meeting highlighted concerns about inflation and the potential need for further tightening of monetary policy. With inflation still above the Committee’s longer-run goal and a tight labor market, most participants see significant upside risks to inflation. This suggests that additional rate hikes may be necessary in the future. The potential for further rate hikes has contributed to the strengthening of the dollar and the decline in gold prices.
The spot price of gold falling below the $1,900 level and the strengthening of the dollar have put downward pressure on gold prices. Concerns about inflation and the potential for further rate hikes by the Federal Reserve have added to the bearish sentiment in the gold market. The key $1,900 level remains a significant barrier for gold, and if the dollar’s strength continues, the bearish slide in gold prices may extend further. Investors will closely monitor the Federal Reserve’s stance on inflation and interest rates for further guidance on the future direction of gold prices.
Analyst comment
Negative news: The spot price of gold fell below the key $1,900 level as the dollar strengthened, and concerns about inflation and interest rates weighed on gold prices. The bearish trend in gold is expected to continue, with the $1,900 level remaining a key barrier.
Short analysis: Based on the strengthening of the dollar and concerns about inflation and interest rates, the market for gold is likely to experience further downside pressure. The bearish slide in gold prices may extend further if the dollar’s strength continues. Investors will closely monitor the Federal Reserve’s stance on inflation and interest rates for further guidance on the future direction of gold prices.
