Gold price extended its losses as the US dollar continues to rise
Gold is facing issues as a result of the reduced risk premium caused by the absence of escalation in the Israel-Hamas conflict.Because of the resurgence in the US Dollar (USD), the gold price has continued to fall. During the Asian session on Wednesday, the price of gold is trading about $1,970 per troy ounce lower.
Gold’s price is also under pressure, partially because traders have factored in a lower risk premium from the Israel-Hamas war. The absence of escalation in the crisis has reduced demand for gold as a safe haven.
Gold prices may rise if China’s GDP growth rate improves.
The International Monetary Fund (IMF) has increased China’s GDP growth predictions, predicting 5.4% growth in 2023, up from 5.0% previously, and 4.6% growth in 2024, up from 4.2% previously. A positive shift in China’s economic landscape may cause gold prices to rise.
Furthermore, the recent decrease in US Treasury yields appears to be linked to an upbeat sentiment on Wall Street. Which dampens demand for safe-haven assets such as gold. Market players are betting on the prospect of the US Federal Reserve (Fed) delaying future interest rate hikes. This notion is reinforced by both last Friday’s poor Non-Farm Payrolls report. And the Fed’s dovish approach. at the summit in November.
Lisa Cook, a member of the Federal Reserve Board of Governors. Stated on Monday that the present interest rate policy is deemed restrictive enough to sustain price stability.
However, the US Dollar (USD) rose when Minneapolis Fed President Neel Kashkari issued a statement on Tuesday. Cautioning against prematurely proclaiming the Fed’s rate hiking cycle to be over. Kashkari questioned the sufficiency of present policy in view of the strong economy. Implying that an increase in inflation would necessitate additional tightening.
Furthermore, Chicago Fed President Austan Goolsbee acknowledged progress. In managing inflation and signaled that the focus of the conversation could shift to assessing how long interest rates should be kept at their current levels.
Investors pay close attention for new insights into the future trajectory of interest rates from Fed.
Investors are expected to pay close attention. For new insights into the future trajectory of interest rates from Fed Chairman Jerome Powell’s remarks. At a conference organized by the Division of Research and Statistics in Washington, DC on Wednesday.
