money.nikaniku.com – Gold Prices Record Weakening for 5 Weeks in a row. Gold prices fell on Friday and posted their fifth straight weekly loss. This weakness was due to expectations of a sizeable interest rate hike by the US Federal Reserve pushing up the dollar and eroding gold’s appeal.
Quoted from CNBC, Saturday (16/7/2022), the price of gold in the spot market strengthened to USD 1,705.39 per ounce, but fell about 2 percent this week. US gold futures also fell 0.13 percent to $1,703.6.
The US dollar held on to a two-decade high, making bullion more expensive for overseas investors. Gold looks to be in free fall, and usually buyers will hold back until prices find decent support, said independent analyst Ross Norman.
With the U.S. dollar having an epic rally, it’s clear that investors see it as a ‘go-to’ safe-haven asset, said Norman, adding, there was “some significant redemptions in gold ETFs on a daily basis due to long-standing institutional liquidations,” he added.
Two of the most hawkish Fed policymakers said on Thursday they favor another 75 basis point rate hike this month.
Meanwhile, US retail sales increased more than expected in June.
There is a possibility of going up
There’s a chance of a slight rise in prices as long as the USD 1,670 support holds the downside, said Hareesh V, head of commodity research at Geojit Financial Services, adding that the key event, however, is the next FOMC meeting.
Higher interest rates increase the opportunity cost of holding non-yielding bullion. The market is also considering the EU’s plan to adopt a seventh package of sanctions against Russia, which would add to the ban on Russian gold imports.
“EU sanctions on Russian gold will have a rather limited impact. I think this move is more of a cue. It is likely that Russia will be able to find buyers outside the EU quite satisfactorily,” said Norman.
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