Gold futures faced a downward trajectory on Friday, August 25th, as a potent dollar and an upswing in US bond yields applied pressure to the precious metal’s prices. The decline was further spurred by indications from Federal Reserve Chairman Jerome Powell regarding an imminent rate hike this year, a message delivered during the annual gathering in Jackson Hole, Wyoming.
In response to these influences, gold futures witnessed a reduction of $7.20, marking a 0.37% decrease, and ultimately settling at $1,939.90 per ounce. Despite this retreat, it is worth noting that gold futures managed to register an upward movement, marking a departure from four consecutive weeks of declines. Silver futures, on the other hand, experienced a slight increase of 0.40 cents, equivalent to 0.02%, reaching a closing value of $24.234 per ounce. Platinum futures demonstrated a more pronounced surge of $5.20 or 0.55%, culminating at $948.20 per ounce. In contrast, palladium futures bore the brunt of the market dynamics, declining by $15.50, representing a 1.3% decrease, and concluding at $1,229 per ounce.
The dip in gold contracts can be attributed to the tandem effect of a strengthening dollar and the ascent of bond yields. Chairman Powell’s remarks underscored the Federal Reserve’s commitment to addressing inflation concerns by pursuing another round of interest rate hikes. In his address, Powell articulated that the prevailing level of inflation remains uncomfortably high, necessitating proactive measures to rein it in.
The ramifications of a fortified dollar extend to the attractiveness of gold. A stronger dollar typically diminishes the appeal of gold contracts, rendering them relatively more expensive for holders of alternative currencies. Furthermore, the resurgence of US Treasury yields amplifies the opportunity cost of holding gold. Given gold’s status as a non-interest-bearing asset, the allure of alternative investments that generate interest gains traction as yields rise.
On Friday, the dollar index, gauging the greenback’s performance against six major currencies, showcased an incremental gain of 0.09%, ascending to a value of 104.0776.
Loretta Mester, President of the Federal Reserve Bank of Cleveland, chimed in by emphasizing the imperative of sustained interest rate hikes to combat inflation. Her statements only served to bolster the growing consensus that the Federal Reserve is poised to enact another rate hike in September, intensifying the downward pressure on gold prices.
Amidst these market movements, a survey conducted by the University of Michigan unveiled a decline in the US consumer sentiment index for August. Falling short of analyst projections, the index registered at 69.5, down from July’s reading of 71.6. Furthermore, consumers voiced expectations of a 3.3% inflation rate over the coming year, a slight decrease from the 3.4% reported in the previous month’s survey. Looking further ahead, the survey revealed a steady anticipation of a 3.0% inflation rate over the next five years.
In conclusion, the trajectory of gold futures reveals the intricate interplay of economic dynamics, with a strong dollar and rising bond yields weighing on prices. Chairman Powell’s statements further underscored the impending interest rate hikes, thereby enhancing the downward pressure on gold. As market sentiments shift and economic indicators fluctuate, the precious metals landscape remains susceptible to a multitude of factors that influence its trajectory.
The Spot Market is Closed
Saturday, August 26, 2023
| Metals Updated at | USD Bid/Ask | Ounce Change | Low/high |
| Gold 04.00 | 1,914.80 1,915.80 | -1.60 -0.08% | 1,891.70 1,924.80 |
| Silver 04.00 | 24.22 24.32 | +0.10 +0.44% | 23.90 24.47 |
| Platinum 04.00 | 946.00 956.00 | +10.00 +1.07% | 932.00 960.00 |
| Palladium 04.00 | 1,197.00 1,257.00 | -15.00 -1.24% | 1,182.00 1,280.00 |
| Rhodium 04.00 | 3,450.00 4,650.00 | +50.00 +1.47% | 3,460.00 4,650.00 |