Gold Prices Drops as Dollar Strengthens
Gold prices softened significantly in the mid-summer dollar on Thursday as the US government had expected a major release of a new round of lending, which would dampen the central bank’s 2025 target and impact market sentiment and gold sentiment.
At around 10:00 in the morning, the spot price of gold (1500 rupees) fell by 0.3% to $ 2,637.13 per ounce. Thus, the value of gold fell by 0.3% to $ 2,653.20.
Fed chair Jerome Powell will hold a press conference at 2:30 pm on EST, after which the Fed will release its economic forecast and conclusion for 2025 at 2:00 pm. EST (1900 GMT).
The tone that Jerome Powell sets will be the real focus of the markets. A hawkish approach may strengthen the currency and raise Treasury yields. Which would push gold prices lower, according to Ricardo Evangelista, senior analyst at Active Trades.
On the other hand, bullion might receive some support from a more cautious tone.
The likelihood of another rate drop in January is only 17%, despite the fact that markets are pricing in a 99% chance of a 25 basis point cut during this meeting. FED WATCH
In a climate with low interest rates, non-yielding gold typically does well.
Important U.S. Traders are also watching the anticipated GDP and inflation data later this week, as these may further influence monetary policy expectations.
In my opinion, the consolidation is a pattern that will continue the gold’s longer-term upward trend. According to Peter Grant, senior metals strategist and vice president at Zaner Metals, I believe that trend will re-exert itself in the first quarter of 2025.
Grant noted that rising global political instability, geopolitical tensions, central banks’ continued purchases, and loosening central bank policies continue to support bullion.
Conclusion
The value of gold has fallen due to the strengthening of the US dollar. The market is expecting more borrowings and Fed Chair Jerome Powell has adopted an aggressive stance. Due to the short-term decline, experts such as geo-economic risks.The Central Bank has raised expectations and is optimistic that gold prices will be cut by the beginning of 2025. There is a hope of improvement in gold in the first quarter of 2025.
FAQ’s
What caused the 0.3% drop in gold prices?
As of 10:00 am on Wednesday, the price of gold fell by 0.3%, as expected by the US government and the expectations related to the economic forecast ahead of the federal reserve were in line with the market practice.
Why did gold prices drop recently?
The strengthening of the US dollar has led to a fall in the price of gold. Which is driven by the government’s expectations of a new fiscal year. This event is expected to impact the Federal Reserve’s 2025 economic targets. Which will impact market sentiment and impact the price of gold.
Why is U.S. economic data important for gold?
The upcoming US GDP and GDP figures are important because they will influence expectations about future Federal Reserve policies. This could either support or reduce expectations of recession in the coming days. Which would have an impact on gold prices.