World gold prices fell to half-year lows due to the strengthening of the dollar
Gold futures closed on Wednesday at their lowest closing price since late March. The decline in quotations was facilitated by the growth of the US dollar index, which reached its highest level in a year.
"The price of gold is likely to decline further as the dollar strengthens," says FXTM market analyst Lukman Otunuga, adding that the Fed's preferred inflation indicator (personal consumption spending index) may also have an impact on gold's outlook. will be published on Friday.
The central bank recently reaffirmed that inflationary pressures continue to support its stance on easing stimulus, says GoldCore's David Russell.
“In the short term, further declines in precious metals prices can be expected if the Fed starts talking more actively about curtailing stimulus or stock markets react negatively to this,” he notes.
Meanwhile, quotes for gold and silver may try to rise again due to the opinion that "the Fed has cornered itself and has little opportunity to significantly reduce measures to support the economy," Russell said.
December gold futures closed Wednesday lower $ 14.60, or 0.8%, at $ 1,722.90 an ounce, the lowest close price since March 31 for the most actively traded contracts, according to FactSet. ... On Tuesday, quotes fell 0.8%.
December silver futures fell 98 cents, or 4.4%, to $ 21.485, the lowest closing price since July 2020.
The ICE dollar index added 0.6% on Wednesday. Over the past period of the week, the index rose by 1.1%, and over the last quarter - by 2.1%.
“Gold and silver prices are under pressure from a new strengthening of the US dollar and higher yields on 10-year Treasuries,” said Carlo Alberto de Casa, analyst at Kinesis Money.
Gold and other non-coupon-bearing precious metals were under pressure on Tuesday as the 10-year U.S. Treasury yield peaked since June 25 and the 30-year yield peaked since July 1, according to market the Dow Jones.
Treasury bonds, like gold, are safe haven assets, and higher yields reduce the demand for gold.
Precious metal price volatility stems from “the belief that current (elevated) inflation will not be just temporary, as central banks have argued over the past few months,” de Casa said.
"Given this development, the Fed will probably have to start phasing out (stimulus measures) as early as November," the analyst said.
American stock markets on Wednesday struggled to recover from massive sell-offs on Tuesday, when the S&P 500 (SPX) index posted its fastest daily drop in percentage terms since May 12.
Meanwhile, COMEX December copper futures closed down 1.1% at $ 4.199 a pound. Platinum futures for January fell nearly 1.6% to $ 947 an ounce, while December palladium contracts fell 1.3% to $ 1,830.30 an ounce.