Gold closes last week's trading at $4,348 per ounce amid anticipation of the US interest rate decision
Gold prices ended last week’s trading with relative stability, closing Friday’s session at around $4,348 per ounce, marking a weekly loss as markets awaited the US Federal Reserve’s decision on interest rates.
A report issued on Sunday by Kuwait’s Dar Al Sabaik stated that gold experienced notable fluctuations last week after coming under pressure following the release of US inflation data, before recovering part of its losses supported by declining bond yields and the fading of the initial strong reaction of the US dollar.
The report added that movements in yields and the dollar remain among the key factors determining the direction of the precious metal, especially with the upcoming Federal Reserve meeting.
It clarified that US Consumer Price Index data showed inflation rose by 0.4% on a monthly basis in August and by 3.4% on an annual basis, with both readings in line with market expectations.
It noted that core inflation rose by 0.3% on a monthly basis, surpassing expectations of 0.2%, while the annual rate declined to 2.4%, which was consistent with estimates.
It pointed out that inflation data strengthened market expectations regarding the continuation of tight monetary policy, as the probability of the Federal Reserve raising interest rates at its next meeting increased to around 85%, compared to about 72% prior to the data release.
The report indicated that rising expectations of a rate hike did not prevent gold from recovering some gains, as bond yields declined during Friday’s trading.
It added that the US Dollar Index stabilized near the 99-point level, while the yield on the 10-year US Treasury bond fell by about one basis point to approximately 4.85%, providing some support for gold, as lower yields reduce the opportunity cost of holding a non-yielding asset.
It stated that markets are also awaiting a range of economic data, including retail sales, industrial production, labor market data, and housing data, alongside comments from Federal Reserve officials.
The report mentioned that geopolitical developments and energy prices will remain important factors for gold, especially with ongoing tensions in the Middle East and concerns related to energy supplies.
It explained that rising oil prices could increase inflationary pressures, which may affect interest rate expectations; consequently, escalating geopolitical risks could boost demand for gold as a safe-haven asset.
From a technical perspective, the Dar Al Sabaik report stated that gold ended the week at $4,348 per ounce, keeping the $4,400 level as the most significant resistance in the current phase. It clarified that if gold manages to break through this level and sustain it above, attention may shift to $4,450, then $4,500, followed by a level of approximately $4,538.
It added that if the $4,348 level breaks and selling pressure continues, prices may test the $4,300 level, then $4,282, which represents important technical support. A break below this level could pave the way for further correction toward lower levels.
On the local front, the report noted that gold prices in the Kuwaiti market continue to be directly influenced by the movement of the global ounce, alongside fluctuations in the dollar and changing expectations of US monetary policy.
It specified that the price of 24-karat gold reached around 43.230 dinars (approximately $140), while 22-karat gold recorded around 39 dinars (approximately $129), and the price of a kilogram of silver reached around 698 dinars (approximately $2,276).
