"Dar Al-Sibaak": Gold Falls to $4,043
Gold prices ended last week’s trading session lower, after facing strong selling pressure in the final sessions, dropping more than 1.5% to close at $4,043 per ounce, despite recording its first monthly gain since February.
A report issued today by Dar Al Ansab, a Kuwaiti bullion company, stated that the decline was driven by a recovery in the US dollar and rising yields on US Treasury bonds. However, the precious metal managed to end July with an increase of approximately 0.5%, marking its first monthly gain since February.
The report added that pressure on gold coincided with the dollar recovering some of its losses, closing at 99.8 points on its index, after earlier recording its largest single-day drop since January 2023. It noted that the yield on 10-year US Treasury bonds rose to around 4.75%, enhancing the appeal of yield-generating assets and reducing demand for gold, which offers no return.
It pointed out that despite the Federal Reserve’s decision to keep interest rates unchanged at its last meeting, markets remain attentive to the next step in monetary policy.
The report clarified that US economic data showed GDP growth slowing to 1.5% in the second quarter, while the core Personal Consumption Expenditures (PCE) price index, the Federal Reserve’s preferred measure of inflation, fell to 3.3%, temporarily easing expectations of interest rate hikes.
It added that several Federal Reserve officials who voted in favor of raising interest rates confirmed that inflation remains above target levels and that monetary policy may need further tightening if inflationary pressures persist. Furthermore, current market expectations for a rate hike at the September meeting range between 60% and 65%, contributing to continued bond yield increases and supporting the dollar.
It noted that geopolitical tensions in the Middle East continued to shape the economic landscape, with developments between the United States and Iran helping to keep oil prices elevated, as West Texas Intermediate crude traded above $84 per barrel. The Dar Al Ansab report stated that sustained high energy prices are increasing fears of a return of inflationary pressures, which could lead the Federal Reserve to maintain a tight monetary policy for longer, adding further pressure on gold prices. Technically, it explained that gold failed again to stabilize above the $4,100 per ounce level, reinforcing a negative short-term outlook. The Relative Strength Index (RSI) also fell below the 50 level, indicating weakening buying momentum and a return of selling pressure.
It highlighted that military developments between the US and Iran will remain a key factor in market movements, as any new escalation could push oil prices higher and increase global inflationary pressures, directly impacting interest rate expectations and gold performance.
On the local front, the Dar Al Ansab report mentioned that prices of precious metals continued to be influenced by global market movements. The price of 24-karat gold per gram reached approximately 40.710 Kuwaiti dinars (about $132), while 22-karat gold stood at around 37.315 dinars (about $121). Silver prices reached approximately 678 dinars per kilogram ($2,202). The report predicted that local prices would continue to be influenced by global gold trends, alongside dollar movements and expected economic data during the current week.
