Gold prices in global markets witnessed a noticeable decline during last week’s trading, affected by increasing concerns about high inflation rates and the continuation of high interest rates for a longer period, in light of the large jump recorded in crude oil prices.
In details of the trading movement, an ounce of global gold recorded a decline of 4.1%, reaching its lowest level in 3 months at $3,975, before ending the week’s trading at $3,995, compared to an opening level of $4,167 per ounce.
In this context, Dr. Hossam Al-Ajmi, head of the market research department at the “Gold Billion” gold trading platform, explained in statements to the “Al-Mashhad” platform that gold prices exceeded the sideways trading range that controlled them for about 4 weeks, following the breaking of the main support level at $4,100 per ounce, and the continued selling pressures that pushed the price to approach the psychological level of $4,000, to close below it by a limited margin.
Al-Ajmi added that the decline in gold was closely linked to the continued rise in Brent crude oil prices, which exceeded $117 per barrel, which reinforced fears of accelerating global inflation and pushed markets to re-evaluate their expectations regarding the course of the major central banks’ monetary policy, which increases the possibility of interest rates remaining high for a longer period, and represents pressure on gold as an asset that does not generate a return.
Al-Ajmi pointed out that gold continued its decline despite the decline of the US dollar and the decline in US government bond yields to their lowest levels in about a month, which are two factors that were supposed to support prices, but the strength of selling pressures limited their impact. The markets also witnessed a wave of selling in shares of technology companies, coinciding with investments moving towards government bonds as a safe haven, while gold was offered for sale by some investors to provide the necessary liquidity to compensate for stock market losses.
On the monetary policy front, the markets are awaiting the US Federal Reserve meeting amid expectations of stabilizing interest rates, while market estimates indicate a 90% possibility of raising interest during the bank’s last meeting this year next December.
In response to questions from consumers and investors about the appropriate decision in the gold market currently, Dr. Hossam Al-Ajmi believed that the current prices are appropriate for purchasing a portion of the investment portfolio at a rate ranging between 40% and 45%, given that the market is exposed to more pressures, stressing that the decision varies according to the length of time to keep the yellow metal. The expert stressed that oil price movements, inflation expectations, and the path of the US dollar remain the most prominent factors influencing the trend of global gold during the coming period.
