Jakarta, CNBC Indonesia – World gold on the spot market recorded higher gains this week following traders’ fears over the weakening US economy which made assets safe haven it’s back on the hunt.
Since the middle of the week until this weekend, spot gold has been recorded to have always strengthened and ended at US$ 1,765.22 per troy ounce this week. This means that in kicking world gold rose 2.25% on a global basis point-to-point from last weekend’s price of US$ 1,726.36 per troy ounce.
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HDFC Securities analyst, Tapan Patel, said the strengthening of gold was supported by the weakening of the United States (US) dollar and the US economy which contracted 0.9% in the second quarter of 2022. The contraction technically brought the US into a recession period because in the first quarter of 2022, their economy also contracted.
Market participants expect that the worsening US economy will make the US central bank put the brakes on its aggressive policy. These market expectations made the US dollar weaken. The dollar index eased to 105.97 in the afternoon, its lowest since July 4, 2022.
“The US recession brought people back to the safe asset of gold. This pushed the gold price rally,” said Patel, as quoted by Kitco.
OANDA analyst Jeffrey Halley said gold has gone through a tough period as it hovers below $1,700. The Fed’s aggressive policies since May 2022 continue to pressure gold. Gold continues to fall from the level of US $ 1,850 per troy ounce at the end of May to fall below US $ 1,700 on July 20, 2022.
“The point of gold support was at US $ 1,675-80. Gold has continued to strengthen from that point,” said Halley.
CNBC INDONESIA RESEARCH TEAM
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