Books – Islam Saeed Saturday, February 10, 2024 01:19 PM
She finished an ounce gold Global trading declined last week in light of the rise in dollar levels and US government bond yields, as expectations continued to grow that the US Federal Reserve is on its way to postponing the decision to cut interest rates. On the other hand, gold is receiving support from the rise in demand for actual gold.
During the past week, the price of spot gold decreased by 0.8% to close the week’s trading at the level of $2024 per ounce. It had recorded the lowest level at $2014 per ounce. Thus, the price of gold has decreased since the beginning of the year by 1.9%, which represents a weak start to this year.
Gold Billion’s analysis reveals that the main reasons behind the decline in the global price of gold this week were the statements of members of the US Federal Reserve, all of which were in favor of postponing the decision to reduce interest and maintain current rates for a longer period of time until ensuring a sustainable decline in inflation rates, which ensures reaching the inflation target. The bank eventually settled at 2%.
This supported the US dollar, which rose last week by 0.1% according to the dollar index, but at the beginning of last week it recorded its highest levels in 3 months, while 10-year US government bond yields rose last week by 3.8% to record the highest level in 3 weeks at 4.195%.
Important economic data was absent from the markets during the past week, but statements by Federal Reserve members made up for this absence, and negative pressure remained on gold as the dollar maintained the gains it achieved from the strength of the US jobs report that was issued the previous week, and statements by Federal Reserve Chairman Jerome Powell that the bank will remain cautious in… Considering any monetary easing this year, the flexibility of the US economy gives it more room to keep interest rates high for longer.
In contrast, when looking at gold prices We find that it did not succumb to a significant decline, but rather moved in a fluctuating and occasional trend that tended to decline, and in the end it stabilized within the trading range that has controlled its movements for nearly 4 weeks.
The reason for this is that gold found support from the demand for safe havens in the financial markets due to the continuing geopolitical tensions in the Middle East region after the Zionist entity rejected truce and ceasefire initiatives.
In addition to this, concerns about the American banking sector have re-emerged in light of some pressures in American regional banks, as Moody’s downgraded the rating of New York Community Bank due to pressure on the bank’s financing operations and cash liquidity.
As for actual demand, physical gold dealers in India imposed bonuses this week for the first time in four months. They were encouraged by higher purchases as local prices declined, while the Lunar New Year festival boosted gold purchases in China and elsewhere.
The high demand has prompted traders in India to impose price increases of up to $2 per ounce, higher than the official local prices. While in China, the world’s largest gold consumer, prices increased by between $36 and $48 per ounce above official prices before the week-long Lunar New Year holiday.
Ahead of the Chinese New Year, China saw high demand for gold, with withdrawals from the Shanghai Gold Exchange in January reaching their highest level since July 2015, and the second highest level ever.
China is witnessing a decline in major stock indices due to the sharp decline in stock markets and the real estate sector, which has led to the country’s benchmark CSI 300 stock index falling by more than 30% since the beginning of the year, erasing a market value of $6 trillion from its peak. In 2021.
This led to the transfer of huge investments from the stock markets to the actual gold market with the aim of hedging against the unstable conditions in China, especially with the fact that taking money and investments out of China and transferring them to another place has become more difficult than it was a few years ago, so this leads to an increase in the attractiveness. Gold as a safe haven and store of value in China’s times of uncertainty.
On the other hand, the Chinese Central Bank slowed its purchases of gold during the month of January, which is the fifteenth month in a row in which China has increased its official gold reserves, and despite the slowdown, it remains on its way to surpassing the last wave of gold purchases in nearly eight years.
The Chinese central bank bought 10 tons of gold last January, as the total gold holdings in China now stand at 2,245 tons, about 300 tons higher than at the end of October 2022.
These factors helped stabilize gold prices and created a solid ground under gold trading that helped it not be violently affected by the recent rise in US dollar levels due to diminishing expectations of a US interest rate cut soon. However, next week will witness the release of inflation data from the United States, which will have a major impact on movements. Both the dollar and gold.
2024-02-10 11:19:00
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