No more brilliant, gold even makes it “horrible”

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The corrected price of gold was exacerbated by the relentless rise in the US dollar and the surge in yields (product) US government bonds (US Treasury) because the US central bank (Federal Reserve / The Fed) is still adopting a stance falcon– until this month to control the inflationary peak.

“We see unstoppable dollar strength here and that will keep gold vulnerable in the short term,” said Edward Moya, senior market analyst at OANDA. Reuters.

The US dollar reaches its highest level in the last 20 years, dampening the demand for priced bullion greenback.

Not only that, product Treasuries also continued to rise in trading on Friday. Reported by CNBC International, product The 2-year Treasury jumped 7.6 bp to 4.203%, where this level is the highest since October 2007.

But for product It also became a medium-term treasure performance proof Uncle Sam’s government bond, the 10-year Treasury, fell 2.1 bp to 3.687%.

“This will see (gold) prices move sideways for the rest of the year,” Fitch Solutions said in a statement.

Still high inflation prompted several large central banks to tighten monetary policy, with the Fed again raising its benchmark interest rate by 75 basis points (bp) last Wednesday, US time.

The Fed now sees interest rates set to hit 4.6% (range 4.5% – 4.75%) next year. This means that there will still be a 150 basis point increase from the current level.

In fact, some Fed officials see interest rates between 4.75 and 5% in 2023, before starting to fall in 2024.

Gold is particularly sensitive to Fed rate hikes, as this can increase the opportunity cost of holding non-productive bullion, while increasing the dollar, where it is priced.

RESEARCH TEAM OF CNBC INDONESIA

[Gambas:Video CNBC]