Purebun.com – Like a Roller Coaster, Today’s Gold Price Rises After Falling to the Lowest Level. Gold prices bounced back in volatile trading on Friday (Saturday Jakarta time). The increase in gold prices was due to the focus shifting to economic risks after rising US inflation readings supported predictions of an aggressive increase in benchmark interest rates.
Quoted from CNBC, Saturday (11/6/2022), today’s gold price in the spot gold market rose 1.4 percent to USD 1,873.58 per ounce. Meanwhile, US gold futures closed up 1.2 percent at USD 1,875.50.
US consumer prices rose in May, suggesting that the Federal Reserve (The Fed) could continue to hike 50 basis points through September. This made gold prices fall to their lowest level since May 19 at USD 1,824.63.
But safe-haven assets quickly erased losses as investors assessed the economic impact, with gold prices rising after a University of Michigan survey showed US consumer sentiment fell to a record low in early June amid soaring gasoline prices.
“Gold prices have been on a roller coaster ride, dropping to month lows before rallying sharply on the CPI report and bouncing back on the worst consumer sentiment report on record,” said Tai Wong, an independent metals trader in New York.
High interest rates usually dim the appeal of gold bullion because they mean an increase in the opportunity cost of holding assets, which do not pay interest.
Gold Price Prediction Next Week
Wong added that the fate of gold next week may depend on the Fed meeting. Gold’s rebound also occurred despite the strengthening dollar exchange rate, and rising US Treasury yields.
Gold prices have been “very resilient given expectations of (rate) hikes, and weak physical markets” amid concerns that inflation could outpace rate hikes, said Standard Chartered analyst Suki Cooper.
Discounts on physical gold in India this week hit a seven-week high, while COVID-19 restrictions deter buyers in China.
“However, gold is likely to give up all of this gain and trend lower towards below $1,800/oz, as policy rates rise sharply,” analysts at TD Securities said in a note.
Elsewhere, the price of silver, such as gold, capped off its early losses and was up 1.2 percent at USD 21.92 per ounce.
Meanwhile, platinum prices rose 0.3 percent to USD 973.91, but palladium fell 0.1 percent to USD 1,922.82.
World Gold Price Slips Bond Yield and US Dollar
Yesterday, gold prices on world markets shrank due to rising US Treasury yields and the strengthening dollar has dimmed gold’s appeal ahead of the release of US inflation data that could strengthen the case for aggressive policy tightening by the Federal Reserve.
Launching the CNBC page, Friday (10/6/2022), the price of gold in the spot market fell 0.32 percent to USD 1,847.28 per ounce. US gold futures fell 0.32 percent to $1,850.6.
“The ECB signaled they would start raising rates in July and continue to raise rates. This keeps gold trading a bit lower… Feels like there’s some risk in the market extending to gold as well, plus bond yields are up a bit,” said Bob Haberkorn, senior market strategist at RJO Futures.
The ECB said it would end bond purchases on July 1 and raise interest rates by 25 basis points by the end of the month.
It will then rise again in September and may opt for a bigger move, if the inflation outlook fails to improve.
US yields rise, increasing the opportunity cost of holding non-yielding gold, while the dollar strengthens, making gold less attractive to overseas buyers.
“Tomorrow’s inflation print has garnered great attention, but with the Fed’s next few hikes, the immediate relevance of the data release is limited,” TD Securities wrote in a note.
Other Metal Prices
“Instead, market participants will be watching for any information that could inform the Fed’s post-September decision-making process.”
The core consumer price index (CPI) is expected to have increased 5.9 percent on the year, after an annual gain of 6.2 percent in April, according to a Reuters poll.
CPI data released Friday could provide clues as to whether the Fed will continue its aggressive tightening in the second half of the year.
Like world gold prices, silver prices fell to USD 21.71 per ounce, while platinum fell 3.62 percent to USD 969.52, and palladium fell 1.12 percent to USD 1,921.18.