Dar Al-Suqayk: Gold Closes Weekly Trading at $4,165

Gold prices ended last week’s trading with a slight improvement at $4,165 per ounce, amid anticipation of US economic data, particularly inflation figures and interest rate decisions, following a limited recovery from a sell-off that had brought the precious metal close to the $4,000 level.

A report issued today by Kuwait’s Dar Al-Sibaak stated that gold’s recovery has not dispelled the pressures facing the metal, given ongoing concerns about US inflation and the likelihood of tighter monetary policy in the coming months.

It added that gold enters a new week of trading amid continued uncertainty in global markets, as investors await key US economic data and assess the Federal Reserve’s monetary policy trajectory.

The report noted that US economic indicators showed divergence, with the Consumer Price Index rising 7.3% year-on-year in September, compared to 3.4% in August, surpassing market expectations of 3.6%.

It highlighted that the Producer Price Index rose 6.3% year-on-year, exceeding expectations, thereby reinforcing fears of persistent inflationary pressures and the difficulty of returning inflation to target levels in the near term.

It emphasized that this divergence reflects a cautious market sentiment, as holding interest rates steady in the short term could support gold prices, while continued expectations of future rate hikes may limit opportunities for sustained gains.

It noted that geopolitical developments in the Middle East and the war in Ukraine remain influential factors in market movements, with ongoing concerns related to the security of sea lanes and global energy supplies.

It pointed out that escalating tensions could increase demand for gold as a hedge asset during periods of uncertainty, while higher oil prices resulting from supply disruptions could intensify inflationary pressures and prompt central banks to keep interest rates at elevated levels for longer.

It mentioned that this situation creates a dual impact of geopolitical developments on gold, supporting safe-haven demand while increasing the likelihood of continued tight monetary policy.

The report outlined that the results and future outlooks of these companies could affect investors’ risk appetite; declining confidence in growth stocks may boost demand for safe-haven assets, whereas strong results could support equity inflows and reduce some investment flows into gold.

It indicated that investors’ attention this week, running from October 19 to 23, is focused on US housing data, jobless claims, and preliminary purchasing managers’ indices, which will provide early signals regarding the performance of the US economy and activity trends in the manufacturing and services sectors.

It noted that the results of these data points will influence investors’ expectations regarding the US interest rate path; continued economic strength alongside rising inflation could enhance the probability of monetary tightening and support the dollar and bond yields, potentially exerting pressure on gold.

From a technical perspective, the report stated that gold faces the $4,200 per ounce level as a major barrier to further upside, as breaking through and holding above it could enhance the chances of targeting $4,242 and then $4,331 before reaching $4,500, should buying momentum improve and supportive factors persist.

The report noted that these levels reflect gold’s continued sensitivity to shifts in interest rate expectations, dollar movements, and yields, with the possibility of sporadic trading remaining until clearer economic or geopolitical catalysts emerge.

It emphasized that gold enters the new week amid conflicting factors, including safe-haven demand support on one side and the risks of persistent inflation and monetary tightening on the other. US economic data, along with movements in yields, the dollar, and geopolitical developments, are expected to be the key determinants of its direction in the coming days.

The report added that the price decline may present an opportunity for renewed buying, but sustained gains will require clearer improvement in supporting factors, as the prospect of monetary tightening remains one of the main challenges to achieving durable advances.

On the local front, the report stated that gold prices continue to be influenced by global ounce movements. The price of 24-karat gold stood at around 42 dinars per gram (approximately $136), while 22-karat gold recorded about 38.500 dinars per gram (approximately $124). The price of a kilogram of silver reached around 632 dinars (approximately $2,050).