2024-01-20 23:33:02
gold
Gold metal suffered strong losses at the end of trading in the week ending January 19, reaching 0.95%, to settle near the level of $2029.48 per ounce, affected by the rise in the US dollar and US Treasury bond yields.
In this regard, the US dollar recorded an increase of 0.78% to 103.239 points, which reinforced the decline in demand for gold as one of the commodities denominated in the green currency. This is due to increasing market expectations regarding the Federal Reserve keeping interest rates at high levels for a longer period, and its implications. Negative impact on gold’s performance.
These expectations were sparked by positive US retail sales data for last December, which rose by 0.6% compared to 0.3% in November. They also rose higher than market expectations of 0.4%, which reflected the strength of demand in the United States and had clear repercussions on inflation in the country.
The positive unemployment benefits data also reinforced the same belief that the US Federal Reserve will maintain the high interest rate for a longer period, as the number of applications for unemployment benefits increased by 187 thousand applications, more than market expectations that expected an increase by 206 thousand applications, indicating the strength of conditions in the American labor market. It has repercussions on consumer spending and, consequently, higher inflation, which led to a rise in the dollar and then a decline in gold prices.
In addition to the clear rise of the dollar over the past week, the recovery in US Treasury bond yields of various maturities contributed to strengthening the downward momentum of gold prices by the end of the week. Buying bonds seemed like a better investment opportunity for traders compared to owning gold. The standard 10-year US Treasury bond yield achieved weekly gains of about 4.69% to record 4.126%, and also, the 30-year US Treasury bond yield recorded weekly gains of 3.69% to 4.333%.
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