Gold Prices Are Falling on Global Markets: The Main Reasons
13 July 14:36
Gold prices fell for the second day in a row on Monday: the ongoing hostilities in the Middle East have heightened inflation concerns and reinforced expectations that the U.S. Federal Reserve will keep interest rates high for a long time to come, reports "Komersant Ukrainian", citing Reuters.
The spot price of gold fell 1.24% to $4,069.08 per troy ounce.
Iran and the U.S. exchanged massive strikes using missiles and drones, with Tehran attacking U.S. targets in the Persian Gulf countries and once again announcing the closure of the Strait of Hormuz.
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Against this backdrop, oil prices jumped by nearly 3%.
“The latest escalation of the conflict in the Persian Gulf is once again heightening concerns about inflation and the risk of further tightening of the Fed’s monetary policy, which is putting additional pressure (on gold) due to rising bond yields and a strengthening dollar,” said Saxo Bank analyst Ulle Hansen.
The focus on the Middle East and rising oil prices, combined with low liquidity during the summer vacation period, are key risks that could push gold prices beyond the current consolidation range of $3,900–$4,200, Hansen added.
Traders estimate the probability of a Fed rate hike in September at about 71%, up from nearly 63% a week earlier, according to the CME FedWatch tool.
The focus this week will be on key U.S. economic data, including June figures on consumer prices, producer prices, retail sales, and initial jobless claims.
Markets are also awaiting the first congressional testimony by new Fed Chair Kevin Warsh on Tuesday and Wednesday, hoping to gain further insights into the state of the economy, inflation, and the future course of monetary policy.
Speculators on the COMEX gold market reduced their net long position by 1,964 contracts to 114,854 contracts during the week ending July 7, following three consecutive weeks of increases, according to published data.
Palladium fell 0.58% to $1,268.94 per ounce, while silver dropped 2.31% to $58.46 per ounce.
Meanwhile, the price of platinum remained stable at $1,626.82.
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