Volatility Gold: Should Buy or Sell?
Updated
The current price of gold stands at $1,893.34 per ounce.
Gold has reached its lowest level in nearly 6 months as on Thursday, the yield on US Treasury bonds rose higher and the dollar strengthened, dealing a heavy blow to gold prices.
During the July meeting of the Federal Reserve (Fed), most members of the committee indicated their support for higher interest rates to curb inflation.
The prospect of higher interest rates in the US is bad news for gold as it increases the opportunity cost of investing in non-yielding assets. This realization has affected gold up until 2023 and is expected to continue weighing heavily on gold until the Fed decides to begin cutting interest rates.
Gold has reached its lowest level in nearly 6 months as on Thursday, the yield on US Treasury bonds rose higher and the dollar strengthened, dealing a heavy blow to gold prices.
During the July meeting of the Federal Reserve (Fed), most members of the committee indicated their support for higher interest rates to curb inflation.
The prospect of higher interest rates in the US is bad news for gold as it increases the opportunity cost of investing in non-yielding assets. This realization has affected gold up until 2023 and is expected to continue weighing heavily on gold until the Fed decides to begin cutting interest rates.
Note
The CME FedWatch tool shows investors are betting on another 37% chance of rate hikes in 2023 and a 58% chance the Fed will leave rates unchanged for the rest of 2023.Note
Financial investors are gradually shifting their capital from safe-haven assets like gold towards investments in production and business sectors or other profitable assets. As a result, gold has lost its prominence in the market.
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