Jakarta, CNBC Indonesia – World gold prices have weakened this week, amid pressure from the strengthening United States (US) dollar exchange rate.
According to Refinitiv data, in a week the world gold price on the spot market fell 1.86% to position US$ 1.754,16/troy ons.
Source: Refinitiv
Wang Tao, Reuters Commodity Analyst, estimates that the future of gold prices is still bleak. According to him, the price will fall deeper when it breaks the support point of US$ 1,782/troy ounce.
“Only a break above US$ 1,807/troy ounce will signal that this weakening trend will reverse. If you look at the daily chart, gold prices could even fall to close to US$ 1,684/troy ounce,” Wang wrote in his research.
Meanwhile, Shrea Paul, Refinitiv analyst, estimates that the movement of gold prices until the end of this month will not be too significant. It is possible that the price of this commodity will move close to US$ 1,800/troy ounce.
“After flat in August, gold prices are down a little over 1% in September so far. Investors remain vigilant, continuing to monitor the latest economic data and rumors regarding plans to tighten monetary policy (tapering) in the United States (US).
“In the future, with a surge in positive cases of corona due to the delta variant, it will threaten the economic recovery so that gold has the opportunity to be chosen by market participants because of its status as a safe asset,” he said.safe haven). However, the strengthening of the US dollar exchange rate, profit-taking (profit taking), and the unclear direction of US monetary policy will limit the increase in gold prices,” said Paul in his research.
For this month, Paul estimates the point support the price of gold will be at US $ 1,717/troy ounce. While the point resistance will be near US $ 1,858/troy ounce.
The price of gold and the US dollar has an inverse relationship. When the US dollar appreciates, the price of gold will correct.
This is because gold is a commodity that is priced in US dollars. When the US dollar strengthens, gold becomes expensive for investors holding other currencies. Demand for gold fell, prices followed.
On Friday (17/9), for example, pressure on gold prices came from the strengthening of the United States (US) dollar exchange rate. At 05:59 WIB, Dollar Index (which reflects the position greenback against six major world currencies) rose 0.34%.
The strength of the US dollar was supported by surprising retail sales data. In August 2021, retail sales in the Superpower Country grew 0.7% compared to the previous month (month-to-month/mtm). Much better than July 2021 which was minus 1.8% mtm. Also much better than market consensus compiled by Reuters with an estimate of minus 0.8% mtm.
The growth in retail sales illustrates that consumption in the Superpower Country remains strong. This means that inflationary pressures are real and stable.
Inflationary pressures, which indicate a strong economic recovery after being hit by the coronavirus pandemic, have made markets believe again that the US central bank (The Federal Reserve/The Fed) can immediately tighten the policy or tapering. It begins by reducing the purchase of securities (quantitative easing) which is now worth US$ 120 billion every month.
Subtraction quantitative easing will make the supply of US dollars no longer as abundant as it is now. Like goods, reduced supply will make prices rise.
The strengthening of the US dollar will certainly take its toll. Not only other currencies, gold prices also seem to be depressed.
CNBC INDONESIA RESEARCH TEAM
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