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Billion gold: gold loses $80 and falls 3.3% in one week

Billion gold: gold loses  and falls 3.3% in one week

The global ounce of gold had a negative week of trading, recording the worst weekly performance in over 5 months, following two consecutive weeks of gains, despite recording a new all-time high at the start of the week.

The price of an ounce of international gold fell last week by 3.3%, losing $80 of its value, as the price closed at $2,334 an ounce and trading for the week began at $2,414 per ounce.

The start of last week saw gold record a new all-time high at $2,450 per ounce, before the price began a gradual decline and crossed the $2,400 level. per ounce due to a change in interest rate expectations in the United States, according to Gold Billion analysis. .

The most notable events of the past week were the minutes of the Federal Reserve meeting, which was held on April 30 and May 1. The minutes of the meeting showed a discussion among bank members regarding the possibility of increasing interest rates or further tightening current interest rates. monetary policy if inflation reached levels that would require it.

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Minutes of the bank’s meeting show that members discussed the extent to which the current tightening of monetary policy is capable of controlling inflation in light of the current strength of the U.S. economy. Overall, the bank still expects inflation to return to target. in the medium term, but it could take longer than expected.

The US dollar rose last week, influenced by the results of the meeting minutes, as it increased by 0.3% according to the dollar index, in addition to the rise in government bond yields to 10 years during the week of 1%.

Gold suffered a shock after Federal Reserve meeting minutes showed investors that interest rate cuts were far from imminent. Although gold is considered a tool to protect against inflation, high interest rates increase the opportunity cost of owning non-productive assets. Additionally, the rising dollar and US bond yields have increased negative pressure on gold, which has an inverse relationship with each of them.

Markets adjusted their expectations for the future of U.S. interest rates this year after the bank meeting minutes. Expectations for a rate cut in September have declined to almost equal expectations for a rate stabilization, while expectations for a rate cut next November have declined. .

It is worth noting that despite uncertainty over interest rate expectations in the United States, gold prices have managed to rise 13% so far since the start of 2024, largely due to strong Chinese demand and ongoing geopolitical uncertainties, according to One Billion Gold analytical tracking.

Despite the increasing chances of a decline in global gold prices during this period, overall expectations for gold’s performance remain very positive, especially with the gold/silver ratio falling, meaning the amount of money needed to buy one ounce of gold. , at its lowest levels since December 2022, considered a favorable area for gold buybacks.

Global bank UBS has raised its gold price forecast, expecting the precious metal to reach $2,600 an ounce by the end of 2024, up from the previous target of $2,500 l ‘ounce.

Furthermore, China still strongly controls price developments in the global gold market, and the latest data indicates that this is likely to continue, while Western investors are expected to soon join in increasing investment in the gold market. gold, as evidenced by the increase in cash flow to support investment funds. Recently, in European and American gold.

China’s private sector imported 543 tonnes of gold in the first quarter of 2024, and China’s central bank added another 189 tonnes to its reserves during the same period.

However, there is now a risk of a slight decline in gold purchases by retail investors in China in the second half of this year, as the government makes greater efforts to revive the economy. If this goal is achieved, the demand for gold. as a safe haven and hedge in China, investment demand for the precious metal will decline.

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