Gold drops to $3,875 per ounce amid pressure from rising oil prices and inflation

Kuwait City, Nov 11 (KUNA) – Gold prices ended last week’s trading at $3,875 per ounce, suffering sharp losses under pressure from rising energy prices, growing inflation concerns, and expectations that the US Federal Reserve will maintain its tight monetary policy for longer.

In a report issued on Sunday, Kuwait Mint Company stated that a sell-off in global technology stocks and concerns related to rising artificial intelligence (AI) spending contributed to increased asset liquidation and margin cover positions, adding pressure to gold despite ongoing geopolitical tensions.

The report noted that markets are entering a new week with anticipation of several key US economic data releases, including manufacturing and services purchasing managers’ indices (PMIs), job openings data, and the private sector employment report, culminating in the non-farm payrolls report on Friday, November 6, which is considered the standout event of the week.

It added that these data points will be influential in shaping expectations for US interest rates in the coming period, as investors focus on economic activity and labor market indicators.

The report said that continued strength in employment and rising wages could bolster the likelihood of interest rates remaining high, thereby supporting the US dollar and bond yields, while increasing pressure on gold. Conversely, signs of a cooling labor market could ease expectations of monetary tightening, providing an opportunity for the precious metal to recover.

The report highlighted that markets are also monitoring the US midterm elections on November 3, given their potential impact on fiscal policies, government spending, and deficits. Additionally, attention is focused on statements from US Federal Reserve officials and developments related to the upcoming December meeting.

The Kuwait Mint report stated that oil prices and developments in the Middle East will remain among the most significant factors influencing markets, amid ongoing concerns about supply disruptions and maritime routes. Markets are also awaiting the OPEC+ alliance meeting and its signals regarding future production levels.

It noted that gold faces a dual impact from rising oil prices: on one hand, higher oil prices may boost demand for gold as a hedge against inflation and geopolitical risks; on the other hand, increased energy costs could delay monetary easing, thereby pressuring gold prices due to higher yields and a stronger dollar.

The report added that markets continue to monitor the earnings results of major companies, particularly technology and AI firms such as Apple, AMD, Palantir, and Qualcomm, as well as service and consumer sector companies. The results and future outlook of these firms will be influential in determining risk appetite, especially following the recent wave of declines in technology stocks.

It noted that markets are also tracking China’s purchasing managers’ indices, as they serve as an important indicator of global industrial demand and demand for precious and industrial metals, particularly silver.

From a technical perspective, the Kuwait Mint report stated that gold faces pressure after closing at $3,875 per ounce, with trading continuing below previous support levels. It clarified that the $3,800 level stands out as a key support zone; a break below it could lead to a test of $3,700, and then $3,500 if selling pressure persists.

He added that, conversely, gold needs to reclaim the $3,886 level and then $3,900 to improve short-term momentum, while the $4,000 level represents a significant psychological and technical resistance; a breakout above it could pave the way for a test of $4,100 and then $4,200. He noted that the probability of a technical rebound remains in place amid price declines, but confirming a trend reversal requires reclaiming resistance levels and holding above them, not merely a temporary rise. The report continued that gold enters the new trading week amid overlapping inflationary pressures, interest rate expectations, and geopolitical risks, which increase the likelihood of continued volatility in the coming period. It pointed out that reclaiming the $3,900 and then $4,000 per ounce levels could serve as an initial indicator of improving buying momentum, whereas a break below support levels could open the door to a deeper correction toward lower levels. It stressed that gold’s movements in November will remain tied to the extent of inflation decline, shifts in US interest rate expectations, and developments in energy markets and geopolitical tensions, making the monitoring of technical levels and risk management essential for investment decisions in the coming phase. On the local front, the Dar Al-Subaik report stated that gold prices in the Kuwaiti market continue to be influenced by global ounce movements, with the price of 24-karat gold gram reaching approximately 0.39 Kuwaiti dinars (about $127), while the 22-karat gram recorded around 0.36 dinars (about $116). It noted that the price of a kilogram of silver reached approximately 0.553 dinars (about $1,700), as traders await global developments in precious metals and energy prices, as well as US monetary policy decisions. (End) S.M.R. / H.T. / T.M.