Gold Closes Last Week's Trading at $4,378 per Ounce, Benefiting from Oil Price Decline

Kuwait City, 20 Sept (KUNA) -- Gold prices ended last week’s trading on an upward note, closing at $4,378 per ounce, marking its first weekly gain in four weeks. The rise was supported by falling oil prices and easing concerns about persistent inflationary pressures, as markets awaited U.S. economic data.

According to a report issued today by Kuwait Mint Company on Sunday, markets continued to assess the implications of the U.S. Federal Reserve’s decision to raise interest rates, alongside movements in the U.S. dollar and yields on U.S. Treasury bonds.

The report noted that gold experienced notable volatility last week after facing strong pressure following the Fed’s 25-basis-point rate hike. However, it recovered part of its losses as oil prices fell and bond yields declined, helping to ease pressure on the precious metal.

It added that geopolitical tensions in the Middle East continued to support demand for gold, as investors seek safe-haven assets amid heightened uncertainty.

The report stated that the Federal Reserve raised its benchmark interest rate to a range of 3.75% to 4.0%, with continued signals suggesting further increases could occur in the coming months.

Market trading currently prices in approximately a 55% probability of another rate hike at the next meeting in October, making statements from Federal Reserve officials and upcoming economic data among the key factors influencing gold’s movement.

The report noted that yields on 10-year U.S. Treasury bonds approached the 5% level, a high that increases the opportunity cost of holding gold, which yields no return. It added that any decline in bond yields could provide additional support for the precious metal, particularly if accompanied by a weaker U.S. dollar.

Although the dollar remained strong last week, supported by expectations of continued monetary tightening—which limited gold’s ability to post larger gains—the precious metal managed to achieve a weekly rise, bolstered by falling oil prices and ongoing geopolitical uncertainty.

The report pointed out that oil price trends remain a crucial factor for gold, as rising oil prices could reignite inflationary pressures and reinforce expectations that interest rates will remain elevated for longer. Conversely, sustained declines in oil prices could help alleviate such pressures.

Looking ahead to this week, markets are focusing on a series of important U.S. economic data releases, including the preliminary September Purchasing Managers’ Index (PMI) reports, which will provide early indicators of economic activity in the manufacturing and services sectors.

Markets are also awaiting weekly jobless claims data and new home sales figures, alongside comments from several Federal Reserve officials that may offer further signals regarding the future direction of monetary policy following the recent rate hike.

Investors will closely monitor statements from U.S. central bank officials to determine whether they lean toward maintaining monetary tightening or see room for a pause, given developments in inflation and economic activity.

The report highlighted that investors are also watching the upcoming meeting between U.S. President Donald Trump and Chinese President Xi Jinping, given the ongoing impact of trade, technology, artificial intelligence, and supply chain issues on global markets.

It emphasized that any new developments in trade relations between the world’s two largest economies could trigger movements in the dollar, commodities, and financial markets.

The report stressed that geopolitical developments in the Middle East and energy prices will remain key factors influencing gold prices in the near term, as escalating tensions could boost demand for the precious metal as a safe haven.

From a technical perspective, the report stated that gold ended the week at $4,378 per ounce, with the $4,400 level remaining a key resistance zone in the current phase. It added that if gold manages to break through and hold above this level, attention will shift to $4,450 and then $4,500, followed by approximately $4,538.

Conversely, if selling pressure returns and the $4,378 level breaks, prices may test $4,300 and then $4,282, which represents a significant technical support level. The report noted that a break below $4,282 could extend the correction to lower levels, with dollar movements and bond yields remaining among the most prominent factors determining trend strength.

On the local front, the Kuwait Mint Company report indicated that gold prices continue to be directly influenced by global ounce movements, dollar fluctuations, and changing expectations regarding U.S. monetary policy. The price of 24-karat gold reached approximately 0.439 Kuwaiti dinars per gram (about $141), while 22-karat gold stood at around 0.396 KWD per gram (approximately $130). Silver prices reached about 715 dinars per kilogram (roughly $2,326).

An ounce is a unit of mass used in various measurement systems, also known as an avoirdupois ounce, equal to 28.349 grams. When used as a unit for precious metals, it equals 31.103 grams.

(End) S.M.R. / H.Th. / N.W.F.