Gold News

Gold Price Cuts Weekly Gain to 0.5% as Dollar Rallies with Inflation Forecasts

The GOLD PRICE touched a 9-week high at the start of Asian trade Friday, peaking at $1987 per Troy ounce before dropping back as the US Dollar extended its rebound on the currency market and market forecasts for inflation also rose, boosting bets that the Federal Reserve isn't done raising its interest rates.
 
Silver also popped higher again, touching a fresh 10-week high at $25.27 before erasing all this week's previous 2.0% gains to trade back at $24.77 per ounce.
 
Gold priced in the Dollar retreated to $1965 per Troy ounce, down more than $20 from its overnight peak but $10 higher from Friday last week.
 
Following solid US jobs market data on Thursday, "The US Dollar rebound has taken the steam out of the month-to-date precious [metals] rally," says a note from Swiss bullion refiners MKS Pamp.
 
"Still gold and silver are holding up relatively well vs. the reaction in FX markets, signaling some physical support has emerged."
 
Despite short-term US bond yields rising 0.1 points this week to put 2-year rates at 4.85% per annum, longer-term US borrowing costs were unchanged, with 10-year Treasury bonds offering new buyers 3.83% per annum.
 
So-called 'real' rates however have fallen to the lowest in 7 weeks, with the 10-year TIPS yield – against which gold has defied its typically inverse correlation so far in 2023 – dropping to 1.45% per annum after hitting the highest since 2009 at 1.81% just at the start of last week.
 
Chart of Dollar gold price vs. 10-year TIPS yields. Source: BullionVault
 
With the Fed universally expected to raise rates again to the highest since 2001 when it meets next week, today's bond-price moves put the Treasury market's 'breakeven' inflation rate forecast at 2.36% per annum, the highest since early March, back before the mini-crisis in US regional banking sent interest rates tumbling and took gold up to new spot-trading records.
 
Global food-price inflation may accelerate again, analysts said Friday, after No.1 rice exporter India banned shipments of non-basmati white rice due to "uneven distribution of rainfall in the key rice-growing areas."
 
Thursday's weekly data on US jobless benefit claims showed initial applications falling back, but ongoing claims rose.
 
The Dollar today edged higher against the rest of the world's major currencies to the highest in almost 2 weeks on its trade-weight DXY index, up 1.4% from mid-July's 15-month low.
 
Both corn and wheat prices both jumped around 2% in Friday's trade, while crude oil edged above $79 per barrel of Brent, gaining slightly for the week.
 
The UK gold price in Pounds per ounce meantime headed for its highest Friday finish in 5 weeks at £1531, while the Euro gold price showed a 1.3% weekly gain at €1764 per Troy ounce.
 

Adrian Ash

Adrian Ash, BullionVault Gold News

Adrian Ash is director of research at BullionVault, the world-leading physical gold, silver and platinum market for private investors online. Formerly head of editorial at London's top publisher of private-investment advice, he was City correspondent for The Daily Reckoning from 2003 to 2008, and he has now been researching and writing daily analysis of precious metals and the wider financial markets for over 20 years. A frequent guest on BBC radio and television, Adrian is regularly quoted by the Financial Times, MarketWatch and many other respected news outlets, and his views from inside the bullion market have been sought by the Economist magazine, CNBC, Bloomberg, Germany's Handelsblatt and FAZ, plus Italy's Il Sole 24 Ore.

See the full archive of Adrian Ash articles on GoldNews.

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