Gold retreats to $4,285 amid anticipation of US interest rate policies and inflation data
Kuwait City, Sept 27 (KUNA) -- Gold prices ended last week’s trading on a downward note, closing at $4,285 per ounce, amid anticipation regarding the US Federal Reserve’s interest rate policies and upcoming inflation data.
According to a report issued today by Kuwait’s Dar Al-Sabiika, gold experienced clear fluctuations during the week, facing selling pressure as the US dollar and US yields rose, before attempting to recoup some losses toward the end of the week. The report clarified that prices reached levels near $4,245 per ounce during the week before regaining some balance, yet remained below the $4,300 mark. Market data showed gold was on track to record a weekly loss of approximately 2 percent.
This performance comes amid the continued impact of the Federal Reserve’s recent decision to raise interest rates by 25 basis points to a range of 3.75 to 4 percent, alongside signals from several Fed officials that kept the possibility of another rate hike this year alive. The updated Federal Reserve projections showed that 16 out of 18 officials expect at least one increase during the current year.
The report noted that these expectations act as a pressure factor on gold, a non-yielding asset, as rising yields on dollar-denominated assets increase the opportunity cost of holding the precious metal. Furthermore, rising yields on US Treasury bonds, particularly the 10-year, kept markets on edge regarding the future path of interest rates.
Dar Al-Sabiika’s report highlighted that the dollar’s performance remains a key factor influencing gold, as the strength of the US currency typically increases the cost of the metal for holders of other currencies. It added that oil prices have become an important factor in shaping market expectations regarding inflation and US monetary policy, as rising energy prices can reignite inflationary pressures and bolster expectations that interest rates will remain higher for longer.
Geopolitical developments in the Middle East remained a persistent factor in market movements, as rising uncertainty levels can support demand for gold as a safe-haven asset. However, the impact of this factor during the week was intertwined with the effects of the strong dollar and rising bond yields.
Market attention this week is focused on a key set of US economic data, led by the Personal Consumption Expenditures (PCE) price index, one of the most important inflation indicators monitored by the Federal Reserve, along with personal income and spending data. The Dar Al-Sabiika report noted that markets are also awaiting the US jobs report and labor market data, as well as the industrial production index, consumer confidence data, and weekly jobless claims.
These data points are particularly significant at this stage, as they could directly influence market expectations regarding the Fed’s future decisions. If the data show continued strength in the US economy and rising inflationary pressures, it could support the dollar and yields, thereby increasing pressure on gold.
From a technical perspective, the report stated that gold ended the week at $4,285 per ounce, with the $4,300 level currently forming a key technical resistance zone, accompanied by several moving averages near the $4,300 to $4,354 range. It suggested that if gold manages to break above and hold above the $4,300 level, attention may shift to the $4,350 to $4,354 area, followed by the $4,400 level, which represents a significant technical barrier at the current stage.
The $4,245 level remains a nearby support level, which prices touched during the previous week, followed by the $4,230 to $4,200 range as a key support zone. A break below this area could pave the way for testing lower levels, with the $4,000 level remaining a relatively distant technical level watched by markets.
Weekly technical analyses indicated that gold continues to trade below several key daily moving averages, reflecting ongoing short-term pressures, while dollar movements and bond yields remain the most critical factors in determining price direction in the coming period.
On the local front, the Dar Al-Sabiika report stated that gold prices in the Kuwaiti market continue to be directly influenced by global ounce movements, alongside changes in the dollar exchange rate and expectations regarding US monetary policy. It noted that the price of 24-karat gold reached approximately 4.7 dinars (about $139), while 22-karat gold recorded around 3.32 dinars (about $127). Meanwhile, the price of a kilogram of silver stood at approximately 696 dinars (about $2,261).
(End) S.M.R / H.T
