Introduction
The global gold ounce wrapped up a week marked by volatility with a marginal uptick. This came after hitting an all-time high due to shifting market sentiments concerning the future of US interest rates. However, as the week drew to a close, gold shed a significant portion of its gains, leaving investors pondering its next move.
Gold Price Movement
: Week’s Performance
The spot gold price witnessed a 0.4% increase over the past week, settling at $2165 per ounce. This followed a surge to its highest historical level at $2222 per ounce and a dip to $2146 per ounce.
: Post-Federal Reserve Meeting
Gold surged to a record high the day after the US Federal Reserve meeting, only to swiftly retract. This downward trend persisted throughout the week, resulting in substantial losses.
Factors Influencing Gold
: Federal Reserve’s Interest Rate Decision
While the Federal Reserve maintained interest rates between 5.25% and 5.50%, market expectations hinted at a potential 75-basis-point reduction by the end of 2024. The Fed’s optimistic outlook on inflation prompted a surge in gold prices.
: US Dollar’s Impact
A 1% increase in the US dollar’s value against major currencies exerted downward pressure on gold prices. This boost was fueled by unexpected interest rate cuts by the Swiss Central Bank and dovish signals from the Bank of England.
Future Outlook
: Price Projection
Analysts anticipate that anticipated US interest rate cuts could propel gold prices to $2300 per ounce by year-end, with many financial institutions setting this as a target price.
: Investment Trends
Gold-backed exchange-traded funds (ETFs) witnessed their first net cash inflow in weeks, indicating renewed investor interest driven by expectations of impending US interest rate reductions.
Conclusion
Despite experiencing a rollercoaster week, gold managed to maintain support above critical levels, hinting at the possibility of future price rallies. However, the market remains cautious amidst uncertainties surrounding US interest rate policy and currency fluctuations.
