Gold prices rose on Friday, despite pressure from the strength of the dollar and the rise in US Treasury bond yields, while investors were evaluating the decisions of major central banks to adhere to high interest rates.
Gold closed in spot transactions at $1,923.29 per ounce, after recording, on Thursday, the largest daily decline since September 5th. US gold futures closed at $1,945.6 per ounce. Thus, gold closed the week without any significant change.
“I expect interest rates to remain higher, and for a longer period, than previously expected, and further tightening is not out of the question,” said Susan Collins, President of the Federal Reserve Bank of Boston.
Goldman Sachs expects the Federal Reserve to begin a cycle of lowering interest rates during the fourth quarter of next year, instead of previous expectations of starting monetary easing during the second quarter of 2024.
Central banks in the world’s largest economies announced their commitment to keeping interest rates high as long as this is necessary to curb inflation.
“Markets looked at central banks and said that now you are holding back not on raising interest rates because inflation has been beaten, but because you are worried that global growth is about to stall,” said Ilya Spivak, head of global macroeconomics at Testilife. He continued, “There is a very strong feeling that global growth is no longer able to withstand.”
The dollar stabilized near the highest level in six months amid expectations that interest rates in the United States would remain high for a longer period, while benchmark ten-year Treasury bond yields rose to the highest level in 16 years.
The dollar index rose 0.15% on Friday, at 105.54 points, after touching 105.78 points during trading, its highest level in six months.
Investors usually buy gold as a hedge in times of economic uncertainty, but high interest rates affect the prices of bullion, which does not generate returns and is priced in dollars.
Markets expect 45% that the Federal Reserve will raise interest rates again before the end of the year. (agencies)
2023-09-23 18:46:25
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