Gold prices fell as the dollar rose to its highest level in more than a week, after positive data for the weekly jobs report in the United States renewed uncertainty about whether the Federal Reserve (the US central bank) would stop raising interest rates after an expected increase next week.
Gold fell in spot trading 0.4 percent to 1962.09 dollars, but it is heading for an increase of 0.4 percent this week. US gold futures also fell 0.3 percent to $1,964.20.
The US central bank is expected to raise interest rates by 25 basis points on July 26. Expectations that this would be the last increase pushed gold to its highest levels in nearly two months yesterday, heading for gains for the third week in a row.
“If the Fed confirms market expectations and stops raising interest rates after this month, this could help gold buyers regain the $2,000 threshold,” said Han Tan, senior market analyst at Exinity.
“But if the Federal Reserve bucks the notion that the rate hike cycle is coming to an end, that could push gold to give up some of its recent gains and return back to the mid-$1,900 threshold,” he added.
The dollar index reached its highest level since July 12 after a sudden drop in weekly claims for unemployment benefits in the United States, boosting bets that the Federal Reserve will continue to raise interest rates for a longer period.
The rise of the dollar affects gold because it makes it more expensive for buyers who hold other currencies, and raising interest rates negatively affects the yellow metal because it increases bond returns, which raises the opportunity cost of possessing it while it does not yield a return.
Silver fell in spot trading 0.1 percent to 24.71 dollars, while platinum rose 0.2 percent to 955.68 dollars, and palladium rose 0.4 percent to 1283.10 dollars.
2023-07-21 14:03:42
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