Gold continues to maintain its downtrend - GOLD 17/08.
The global price of gold has experienced a sharp decline, dropping from $1,905 per ounce to $1,892 per ounce.
Gold's downward trend continues as the US monetary policy makers lack consensus on interest rate management.
Yesterday evening, the US announced its monetary policy meeting for July 2023. The Federal Reserve (FED) remains focused on curbing inflation. Some members of the organization believe that interest rates need to be increased further in order to achieve their 2% inflation target.
The FED acknowledges the uncertain growth of the US economy and recommends that interest rates should remain stable for the time being. However, there is still a possibility that interest rates in the US may continue to rise. As a result, many individuals are holding onto USD currency which helps maintain its strength while causing a decrease in gold prices.
Gold's downward trend continues as the US monetary policy makers lack consensus on interest rate management.
Yesterday evening, the US announced its monetary policy meeting for July 2023. The Federal Reserve (FED) remains focused on curbing inflation. Some members of the organization believe that interest rates need to be increased further in order to achieve their 2% inflation target.
The FED acknowledges the uncertain growth of the US economy and recommends that interest rates should remain stable for the time being. However, there is still a possibility that interest rates in the US may continue to rise. As a result, many individuals are holding onto USD currency which helps maintain its strength while causing a decrease in gold prices.
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Despite short-term selling pressure, analysts at Australia-based bank ANZ said they maintain a medium to long-term bullish outlook for the precious metal.
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In the short term, gold will fall as strong economic data, moderate inflation and strong labor data are increasing the likelihood that the US economy will escape the threat.
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The latest US retail sales data, which will be released on Tuesday, could contribute to the debate. So far, US consumers have remained resilient even in the face of rising interest rates, and this momentum could bolster the dollar.
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The price of gold has become more costly for buyers who hold currencies other than the dollar, as indicated by a 0.2% increase in the dollar index.
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The strong tightening of monetary policy by the Federal Reserve poses the biggest challenge for gold and precious metals, with an 86.5% chance that the Fed will keep interest rates within a range of 5.25% to 5.50%.
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Daniel Hynes, senior commodity strategist at ANZ, said that while he cannot rule out a drop below $1,900 an ounce, he sees signs of solid support in the market.
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Currently, the benchmark interest rate in the US is in the range of 5.25 - 5.5%, the highest level in the past 22 years.
