Gold retreats to $4,043 per ounce despite recording first monthly gains since February
Gold prices ended last week’s trading session lower after facing strong selling pressure in the final days of the week, dropping more than 1.5 percent to close at $4,043 per ounce, despite posting its first monthly gain since February.
A report issued on Sunday by Kuwaiti Mint Company stated that the decline was driven by the recovery of the US dollar and rising yields on US Treasury bonds. However, the precious metal managed to end July with a gain of approximately 0.5 percent, marking its first monthly increase since February.
The report added that pressure on gold coincided with the US dollar recovering some of its losses, as the dollar index closed at 99.8 points after recording its largest single-day drop since January 2023 earlier in the week.
It noted that the yield on the 10-year US Treasury bond rose to around 4.75 percent, bolstering the appeal of yield-generating assets and reducing demand for gold, which offers no yield.
It pointed out that although the US Federal Reserve (the central bank) decided to keep interest rates unchanged at its last meeting, markets are still anticipating the next move in monetary policy.
The report clarified that US economic data showed GDP growth slowing to 1.5 percent in the second quarter, while the core Personal Consumption Expenditures (PCE) price index, the preferred measure of inflation for the Federal Reserve, fell to 3.3 percent, temporarily easing expectations of an interest rate hike.
It highlighted 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.
It stated that current market expectations for an interest rate hike at the September meeting range between 60 and 65 percent, which has contributed to continued rises in bond yields and supported the US dollar.
It noted that geopolitical tensions in the Middle East continued to shape the economic landscape, as developments between the United States and Iran helped keep oil prices elevated, with West Texas Intermediate crude trading above $84 per barrel.
The “Kuwaiti Mint” report said that sustained high energy prices are fueling fears of a resurgence of inflationary pressures, which could prompt the Federal Reserve to maintain a tight monetary policy for longer, adding further pressure on gold prices.
From a technical perspective, it explained that gold failed once 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 mark, signaling weak buying momentum and a return of selling pressure.
It added that the $4,022 level represents the first support level, followed by the psychological level at $4,000. If this level is broken, the decline could extend toward $3,959.
It mentioned that if prices recover, surpassing the $4,100 level would target $4,165, then $4,185, before facing the main resistance at $4,202.
It indicated that military developments between the United States and Iran will remain a key factor in market movements, as any new escalation could push oil prices higher and increase global inflationary pressures, which would directly impact interest rate expectations and gold performance.
On the local front, a report from Dar Al-Suqayb stated that precious metal prices continued to be influenced by global market movements, with the price of 24-karat gold reaching 40.710 Kuwaiti dinars per gram (approximately $132 USD), while 22-karat gold was recorded at around 37.315 dinars per gram (approximately $121 USD). The price of a kilogram of silver stood at around 678 dinars ($2,202 USD).
The report forecast that local prices would continue to be affected by global gold trends, alongside movements in the US dollar and anticipated economic data during the current week.
