Oct 15, 2022
VOT Research Desk
Market Analytics and Considerations
Gold Weekly performance Rundown
Gold’s benchmark futures contract on New York’s Comex, December, settled at $1,648.90 an ounce, down $28.10, or 1.7%, on the day, after a session low of $1,646.15. The dollar is stealing every safe-haven shine out there, leaving gold, the original precious metal, with very little luster. It lost 3.5 percent for the week, or just over $60.
After falling to $1,640.71 at midday, the spot price of bullion, which is followed by some traders more closely than the futures price, was at $1,645.24 at 14:00 ET (18:00 GMT).
According to data from Investing.com, gold’s weekly decline was the worst since a drop of nearly 4% in the first week of August.
Before the sector’s bulls had a chance, gold broke below key support at $1,650 on Thursday. The yellow metal was able to recoup nearly all of its losses on the day thanks to the dollar’s fall on speculation of peak inflation in the United States.
However, on Friday, as the Dollar Index rose for the seventh time in eight days, gold selling resumed. A session high of 113.30 was reached by the index, which compares the dollar to the euro, yen, pound, Canadian dollar, Swedish krona, and Swiss franc. Analysts stated that technical charts indicated a very likely Dollar Index high of 120.
Meanwhile, bond yields compared to the 10-year Treasury note shot up to a 14-year high of 4.06 percent.
The Fed’s campaign against inflation has primarily benefited the dollar and yields, as the central bank increased interest rates by 300 basis points this year and appears to be adding another 125 before the end of the year.
Gold has struggled for months to reassert its safe-haven status as funds consistently flowed to long-dollar and short-bond positions at the expense of the yellow metal. The rise in the two has been anathema to gold.
OANDA analyst Craig Erlam stated, “With inflation appearing so stubborn, it may need to go further than markets previously anticipated.”That doesn’t look good for gold right now. The lows of yesterday, which were around $1,640, may soon be tested once more, followed by the lows of late September.
Gold prices fell on Friday after data showed that retail sales in the United States were flat and below expectations in September. This was due to inflation that was close to 40-year highs and hurt consumer appetite, which is the most dynamic part of the economy.
The Commerce Department reported 0.4% growth in retail sales for August, which was lower than the minimum of 0.2% that economists had anticipated.
Retail sales increased by 8.4% in the year to September, down from 9.4% in the year to August.
Consumer spending, which makes up 70% of the U.S. GDP, is heavily influenced by retail sales.
The reading of the U.S. Consumer Price Index (CPI) on Thursday showed a growth of 0.4 percent for September, which was double the estimates of economists and four times higher than the expansion in August. The September numbers for retail sales came after those readings. In addition, September’s annual CPI growth of 8.2% was not too dissimilar to the four-decade high of June’s expansion of 9.1%.
The retail sales and CPI numbers, taken together, suggested that the Fed was still a long way behind in its fight against inflation.
To alleviate exorbitant price pressures, the central bank has increased interest rates by 300 basis points since March and is likely to add another 125 basis points before the end of the year. Any discussion of “peak inflation” is currently meaningless because economists anticipate additional increases in 2023.
The high-flying housing sector and the once-exuberant stock market have been identified as potential targets by economists as the Fed’s sharpest rate hikes in four decades could plunge the nation into a deep recession.
The top 500 stocks indicator on Wall Street, the S&P 500, is down almost 25% year-to-date, while the tech stocks barometer, the Nasdaq, is down 33%.
Mortgage rates in the United States, on the other hand, rose to 6.7% two weeks ago, the highest level in 15 years, as rising borrowing costs for home loans caused by Fed rate hikes increased.
