Gold tumbled on Friday for its biggest weekly drop in nearly four months, after hopes for progress in peace talks between Russia and Ukraine, as well as demand for the safe-haven metal slumped amid the effects of the US rate hike. Spot gold fell 1.11% on a daily basis, closing the week at $1,920.85, while US gold futures fell 0.72% to $1,929.30.
Gold can drop pretty quickly, according to Edward Meir
The dollar has bounced against its rivals, making bullion more expensive for offshore buyers. “We have seen that the momentum and speculative anger from the occupation have cooled considerably over the past 10 days for gold,” said David Jones, chief market strategist at Capital.com.
Bullion is down 2.8% this week as optimism about peace talks boosted sentiment in broader financial markets, lowering demand for safe-haven assets. Edward Meir, analyst at ED&F Man Capital Markets, predicts:
If there is a ceasefire or some kind of deal, gold prices could drop pretty quickly.
Suki Cooper: Long-term interest in bullion reignited
cryptocoin.com As we reported, in the middle of last week, the Federal Reserve increased the overnight rate by a quarter point and envisioned an aggressive plan to push borrowing costs to restrictive levels next year. Higher interest rates tend to increase the opportunity cost of holding interest-free gold.
However, Standard Chartered analyst Suki Cooper said in a note that the hawk has not derailed the positive mood for gold and the current geopolitical risk has fueled inflation concerns and rekindled long-term interest in bullion. Suki Cooper explains her views as follows:
As the physical market came under pressure, growth in investor interest has more than compensated for this weakness for now. This shows that the volatile price action is permanent.
According to Craig Erlam, we can see the dips being bought
On Friday, gold prices posted their biggest weekly decline in nearly four months as some of the safe-haven demand spurred by Russia’s invasion of Ukraine cooled. Craig Erlam, senior market analyst at OANDA, comments on the market movements as follows:
Gold and dollar are very volatile. Headline markets could therefore see much more movement in both directions throughout the day. Significant progress has been made in the Russian-Ukrainian negotiations. This development is largely behind the weekly decline of gold.
“Gold will continue to be well supported,” said Craig Erlam, and as demand for safe-havens and hedging remains strong, we may see increasingly buy-in on the dips.
“Increasing geopolitical risks and high inflation will support gold prices”
Gold is benefiting from safe-haven demand, but easing tensions has brought prices back to $1,900. Economists at ANZ Bank expect the yellow metal to remain supportive amid geopolitical risks and rising inflation. Stating that Russian sanctions increase the risk of stagflation, economists discuss the impact of developments on gold prices as follows:
Investors are turning to gold as the Ukraine-Russia war worsens and uncertainties persist. As Russia is an important commodity producer, sanctions intensify the risk of stagflation. We believe that increased geopolitical risks and high inflation will support gold prices.
Contact us to be instantly informed about the last minute developments. twitter‘in, Facebookin and InstagramFollow and Telegram and YouTube join our channel!
Disclaimer: The articles and articles on Kriptokoin.com do not constitute investment advice. Cryptokoin.com does not recommend buying or selling any cryptocurrencies or digital assets, nor is Kriptokoin.com an investment advisor. For this reason, Kriptokoin.com and the authors of the articles on the site cannot be held responsible for your investment decisions. Readers should do their own research before taking any action regarding the company, asset or service in this article.
Warning: Citing the news content of Kriptokoin.com and quoting by giving a link is subject to the permission of Kriptokoin.com. No content on the site can be copied, reproduced or published on any platform without permission. Legal action will be taken against those who use the code, design, text, graphics and all other content of Kriptokoin.com in violation of intellectual property law and relevant legislation.