Gold futures closed lower on Friday, weighed down by a stronger dollar after the Federal Reserve raised interest rates this week for the first time since 2018. After the brief trip above $2,000, gold is currently on a downswing.
- Gold fell $13.9, or 0.72%, at $1,929.3 an ounce and was down about 2.8% for the week.
- Silver was down 52.9 cents, or 2.07%, at $25.087 an ounce.
- The platinum was up $4.6, or 0.45%, at $1,035.9 per ounce.
- The palladium contract was up $1.0, or 0.04%, to close at $2,493 an ounce.
The dollar index against the six major currencies in a basket of currencies rose 0.27% to 98.2360.
Gold prices are pressured by a stronger dollar, as the strong dollar makes gold contracts more expensive for investors holding other currencies.
The dollar rose after the Federal Reserve began raising interest rates by 0.25% on Wednesday (March 16) and plans more rate hikes this year.
Market analysts expect the gold price to fluctuate in the short term, with key support at $1,900 per ounce. While the conflict between Russia and Ukraine and the next Fed monetary policy decision will be the main drivers for the gold price.
Peace talks between Russia and Ukraine have failed to make much progress, according to Russia, with the war entering its fourth week. Analysts believe that global economic growth will take a severe hit this year due to rising commodity prices, which have been exacerbated by sanctions against Russia. Even before the invasion of Russian troops in Ukraine, strong price increases could be seen in commodities, especially in the energy sector and industrial metals.
Analysts believe that the Ukraine war is the main reason for the rise in gold prices, but in the past gold prices have risen mainly because people are worried about their purchasing power. With real interest rates still well into negative territory, the fundamentals still support rising gold prices. Of course, the war in Ukraine is acting as a global uncertainty factor, but that has only accelerated the rise in gold prices. The fact that Russia is the world’s second-largest gold producer will also have an impact sooner or later. Investors should keep an eye on the movements of central banks as currency supply is the main driver of inflation and consequently a main driver of gold prices.
The spot Market is Closed
Saturday, March 19, 2022