Gold falls amid rising oil prices and higher US dollar
Al Jazeera
Al Jazeera
Original Source
Gold prices dropped 3.3 percent to their lowest level in seven weeks at $4,146.51 per ounce amid rising oil prices and escalating US-Iran tensions. The decline reflects concerns over inflation and investor preference for yield-bearing assets as US Treasury yields increase.
Gold prices are falling as concerns of rising fuel prices stoke inflation worries on the back of the war between the United States and Iran.
Spot gold prices fell by 3.3 percent to reach a more than seven-week low at $4,146.51 per ounce on Monday.
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Rising oil prices, a higher US dollar and Treasury yields stoked inflation concerns, creating further headwinds for the metal.
This is the lowest level for gold values since August 5. US gold futures also fell by 3.3 percent to $4,178.40.
Although gold is traditionally considered an inflation hedge, higher interest rates dent its appeal as investors prefer yield-bearing assets.
“There might be no notable direct impact on regular people due to that. However, investors who had turned to gold will see a hit, especially under the current high inflation rates,” Sherif Othman, CEO of the Maryland-based Poise Investment Advisors, told Al Jazeera.
“Gold does not yield interest, so when Treasury yields go up, investors turn away from gold, impacting its value”, he added.
The Fed lifted benchmark rates by a quarter percentage point earlier this month and flagged that at least one more hike is likely in the coming months.
The US dollar was steady near a two-month high, and oil prices spiked about 3 percent as US President Donald Trump rejected an Iranian offer to resolve the conflict and reopen the Strait of Hormuz.
Such factors triggered several policymakers to warn that inflation risks remain elevated and that interest rates may need to rise, with Cleveland Fed President Beth Hammack among the latest officials to reiterate that view.
Higher Treasury yields and the US dollar are “creating a perfect storm to push the metals prices sharply lower,” according to Jim Wyckoff, a market analyst at American Gold Exchange.
Spot silver also fell by 4.7 percent to $61.27 per ounce, platinum declined 2.9 percent to $1,726.30 and palladium lost 4.4 percent to $1,211.45.
Spot gold prices fell by 3.3 percent to reach a more than seven-week low at $4,146.51 per ounce on Monday.
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Rising oil prices, a higher US dollar and Treasury yields stoked inflation concerns, creating further headwinds for the metal.
This is the lowest level for gold values since August 5. US gold futures also fell by 3.3 percent to $4,178.40.
Although gold is traditionally considered an inflation hedge, higher interest rates dent its appeal as investors prefer yield-bearing assets.
“There might be no notable direct impact on regular people due to that. However, investors who had turned to gold will see a hit, especially under the current high inflation rates,” Sherif Othman, CEO of the Maryland-based Poise Investment Advisors, told Al Jazeera.
“Gold does not yield interest, so when Treasury yields go up, investors turn away from gold, impacting its value”, he added.
The Fed lifted benchmark rates by a quarter percentage point earlier this month and flagged that at least one more hike is likely in the coming months.
The US dollar was steady near a two-month high, and oil prices spiked about 3 percent as US President Donald Trump rejected an Iranian offer to resolve the conflict and reopen the Strait of Hormuz.
Such factors triggered several policymakers to warn that inflation risks remain elevated and that interest rates may need to rise, with Cleveland Fed President Beth Hammack among the latest officials to reiterate that view.
Higher Treasury yields and the US dollar are “creating a perfect storm to push the metals prices sharply lower,” according to Jim Wyckoff, a market analyst at American Gold Exchange.
Spot silver also fell by 4.7 percent to $61.27 per ounce, platinum declined 2.9 percent to $1,726.30 and palladium lost 4.4 percent to $1,211.45.
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Tags:#الذهب#أسعار المعادن#التضخم#الدولار الأمريكي#النفط#الأسواق المالية
Source: Al Jazeera
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