Gold has remained below $1,830 an ounce on demand from institutional investors “softening”, according to MKS Group
Record-high gold production in the first two months of the year and record-low production costs for miners is driving a rebound in gold prices.
Gold has been trading just above $1,800 an ounce, which is the lowest it has been since November 2021 you can check the latest gold price.
Traders and analysts are focusing on the support level of $1,300 and are awaiting interest rate hikes from the US Fed and the possibility of more economic weakness.
That view was reinforced after US inflation readings missed market forecasts on Tuesday and the rise in the value of the dollar.
The inflation figures strengthened the expectation that US central bankers will pursue a course of action that will lift the Fed funds rate two times this year, rather than three.
Other analysts say that the combination of a strengthening dollar and the Fed is stalling the demand for gold in Japan and China.
That combined with the stronger dollar has meant that gold prices have been on a downward trajectory for the past two months, MKS said in a research note.
Gold prices are up about 10% since hitting their lowest levels in over a decade, in January you can check the 22-carat gold.
Silver has also dropped, by about 10% this month. The price of silver is off more than 5% this month, according to Reuters data.
“What we are seeing is the continuation of the dollar rise, which has pushed gold into a range that is not supportive,” said Naeem Aslam, chief market analyst for Think Markets UK. “While the gold price has risen by 7% year-to-date, the dollar has gained 11% over the same period.”
The combination of the strong dollar and a possible rate hike will be negative for gold prices.
Ken Lugar, a partner at investment manager Catawba Capital in Charlotte, NC, believes gold will end this year between $1,950 and $2,200.
Lugar said: “It’s tough to see it go much lower from here. Prices should continue to move higher in the medium term as investor sentiment continues to trend towards negative, creating further demand.”
But a strong dollar combined with a new round of interest rate hikes by the Federal Reserve would put pressure on gold.
The effect will not be as strong in the near term as the stronger dollar could be a good sign for investors, said J. Richard Harvey, senior vice-president at ScotiaMocatta USA.
“We are very much a buyer in the short run. But the strong dollar will likely continue to put pressure on precious metals in the long run. I’m a buyer at these levels and would consider increasing my position at $1,200.”
The dollar has gained 6.5% in the first two months of the year, but that strength was not present in the US currency in the late 2000s when gold enjoyed annual price increases of about 16%.Cryptocurrency is becoming most popular day by day and many peoples are getting involved in it every day they buy cryptocurrenciez