Gold is getting cheaper on global markets: reasons for the decline in the metal’s value
9 March 15:09
Global gold prices fell amid a strengthening US dollar and a sharp rise in oil prices. Rising energy prices have increased inflationary risks and reduced expectations of a rapid decline in interest rates in the US.
This was reported by "Komersant Ukrainian", citing a Reuters report.
Precious metal prices
The spot price of gold fell 1.4% to $5,097.70 per ounce, after falling more than 2% earlier in trading. At the same time, US gold futures for April delivery fell 1% to $5,106 per ounce.
Other precious metals also showed negative dynamics. Spot silver lost 1.3% and traded at $84.42 per ounce, although earlier during the session the decline exceeded 5%. Platinum fell 1.3% to $2,108.05, while palladium fell 2.4% to $1,586.75 per ounce.
Reasons for the decline
One of the main reasons for the decline in prices was the strengthening of the US dollar, which rose to its highest level in more than three months. This makes gold more expensive for investors using other currencies and reduces demand for the precious metal.
Additional pressure on the market was caused by a sharp rise in energy prices. Oil prices rose more than 15% to over $110 per barrel amid the escalation of the war between the US and Israel against Iran. Fears of supply disruptions through the Strait of Hormuz have forced some major oil producers in the Middle East to cut supplies.
The rise in oil prices has increased inflation risks and reduced expectations of a rapid decline in interest rates in the US. Investors assume that the Federal Reserve will keep rates unchanged following its March 18 meeting. According to the CME Group’s FedWatch tool, the probability that rates will remain unchanged in June has risen to over 51%.
Analysts note that much of the rise in the price of gold over the past year has been linked to expectations of a softening of US monetary policy. However, against the backdrop of inflationary risks caused by expensive energy, these expectations are weakening, which is reflected in the gold market.
