Gold price today July 28: Plunge to decrease in price

On July 27, the Fed raised interest rates by 0.25% and brought interest rates to a 22-year high. Fed Chairman Jerome Powell said he may pause rate hikes at the next meeting. However, Mr. Powell noted, a rate cut is very unlikely this year.

The Federal Open Market Committee (FOMC) will have its next meeting on September 19-20.

The stock market reacts to the Fed's decision. The Dow Jones Industrial Average rose 26.08 points, or 0.07%, to 35,464.15. The S&P 500 composite index fell 8.5 points, or 0.19%, to 4,558.96. The Nasdaq Composite Technology Index fell 45.25 points (0.32%) to 14,099.31 points.

Experts forecast the US economy in the second quarter of 2023 to grow by 1.8% compared to the same period in 2022.

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Additionally, a separate report from the Labor Department on Thursday showed initial claims for state unemployment benefits fell 7,000 to a seasonally adjusted 221,000 for the week ended July 22.

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Gold price is very sensitive to interest rate hikes. Rising interest rates increase the opportunity cost of holding non-yielding assets like gold.

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The biggest chance for gold to hit new record highs is when the Fed announces the end of its tightening cycle, said Matt Simpson, market analyst at financial services firm City Index. and no recession is imminent.

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According to Nicholas Frappell of ABC Refinery, gold prices are still trending up in the medium and long term.

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The first estimate of US gross domestic product for the second quarter came in at a 2.4% year-on-year increase, beating market expectations for a 2.0% gain. The internals of the GDP report are also solid. Meanwhile, US durable goods orders were reported to have increased 4.7% in June against expectations for a 1.5% increase.

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A separate report from the Labor Department on Thursday showed initial claims for state unemployment benefits fell 7,000 to a seasonally adjusted 221,000 for the week ended July 22.

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Following the data, the dollar index rose 0.8% against its rivals, making gold more expensive for holders of other currencies. Yields on 10-year US bonds rose to two-week high..

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The market on Thursday pretty much digested Wednesday afternoon's 25 basis point rate hike from the Fed. Fed Chair Powell's remarks at his press conference were seen as not too hawkish and not too dovish and the market did not have a major reaction.

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Some Fed watchers are thinking the central bank is now done with its rate hike cycle, while others think the Fed will make another rate hike in November.

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"There's been a big punch in gold with better-than-expected initial claims numbers showing the strength of the U.S. labor market is growing," said Phillip Streible, chief market strategist at Blue Line Futures in Chicago. recover".

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Gold price forecast for the near-term, independent analyst Ross Norman said, gold prices have benefited from a weak dollar as expectations of the Fed are somewhat less hawkish, but uncertainty about rate hikes in the future. future makes bullion vulnerable.

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The market received a good 25 basis point hike from the Federal Reserve on Wednesday.

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Stock markets in Asia and Europe both recorded gains in overnight trading. The US stock index also rose at midday and is at or near its highest level of the year

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In other news, the European Central Bank made a slight increase in its annual key interest rate at its monetary policy meeting today, as expected.

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Looking to the longer term, George Milling-Stanley, director of gold strategy at State Street Global Advisors, thinks the precious metal will remain supported by fears of a looming recession. “People are still concerned about the health of the economy, and uncertainty is good for gold. I don't think that uncertainty will go away anytime soon," he said.

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The expert added that, even if a recession is avoided, the Fed's aggressive monetary policy will slow growth. “While not a perfect environment for gold, low growth and persistent inflation are still positive for the precious metal,” said Milling-Stanley.

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With the above developments, investors may worry that holding precious metals will be disadvantageous. Therefore, when the world gold price traded in the area of 1,980 USD/ounce, they sold out massively to recover capital.

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Gold is very sensitive to rising interest rates. Rising interest rates will reduce the attractiveness of gold because it increases the opportunity cost of holding non-yielding assets like gold.

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Analysts note that growing rifts in consumption are also supporting gold prices. The report notes that personal income has not kept pace with consumption. Specifically, personal income rose 0.3 percent in June, compared with a revised 0.5 percent gain in May. The data fell short of expectations as economists expected a gain of zero. 5%. .

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In a recent report, the US Department of Labor said that the economy created 209,000 jobs in June. This is the first time the employment data has failed to meet expectations since May 2022.