Gold ends the week at $4,054, posting modest gains

Gold prices ended last week’s trading at $4,054 per ounce, posting modest weekly gains after recovering from losses in the previous session, amid continued market caution as geopolitical tensions in the Middle East escalated and global energy prices rose.

A report issued on Sunday by Kuwaiti Mint Company stated that the precious metal continued to trade under clear pressure despite the gains recorded at the close, as expectations grew that interest rates would remain at elevated levels for longer, reducing gold’s appeal as a non-yielding asset.

The report clarified that gold had experienced notable declines over recent months since the outbreak of confrontations between the United States and Iran, as investors shifted their focus to the inflationary effects of rising oil prices rather than turning to gold as a safe haven. Fears of rising inflation had reinforced expectations of continued tight monetary policies.

It added that gold prices stabilized at the end of the week near levels ranging between $4,050 and $4,065 per ounce, after falling by about 2 percent in the previous session, as investors weighed the impact of geopolitical tensions and higher oil prices against expectations for U.S. monetary policy.

The report noted that attention remained focused on the upcoming meeting of the U.S. Federal Reserve (the central bank), with expectations pointing to interest rates being held unchanged. However, markets still anticipated the possibility of another rate hike in the coming months if inflationary pressures persisted.

It highlighted that rising oil prices were the most influential factor driving market movements last week, fueled by ongoing tensions in the Middle East and fears of supply disruptions.

The report pointed out that sustained increases in energy prices were raising production and transportation costs, which could compel central banks to maintain their tight monetary policies for a longer period.

It noted that persistently high U.S. interest rates were boosting yields on U.S. Treasury bonds and sustaining the strength of the U.S. dollar, while also increasing the opportunity cost of holding gold compared to yield-generating assets.

It said the U.S. dollar continued to post gains last week, while U.S. Treasury yields declined modestly, providing some support for gold prices and limiting its losses.

It added that military and political developments in the Middle East remained the primary driver of global markets, with ongoing military operations between the United States and Iran coinciding with concerns over the security of navigation in strategic sea lanes, alongside signs that political talks could resume despite the continued military escalation.

From a technical perspective, the (Kuwaiti Mint) report stated that the overall trend for gold remained bearish despite the limited recovery seen at the end of the week, as trading continued below its key moving averages, with momentum indicators pointing to sustained weakness in buying pressure.

It explained that the $4,000 per ounce level was considered the most important psychological support, followed by $3,941 and then $3,886, while the $3,500 level represented a major long-term support. The $4,100 per ounce level was identified as the first significant resistance, followed by $4,165 and then $4,200, noting that breaking through these levels was essential to improving the technical picture and restoring an upward trend.

It is anticipated that if inflationary pressures persist and energy prices continue to rise, central banks may maintain tight monetary policies, which could limit gold’s gains in the short term. However, the precious metal may see gradual improvement if tensions ease, oil prices decline, and expectations of interest rate hikes recede.

On the local front, the report stated that prices of precious metals continued to be influenced by global movements. The price of a gram of 24-karat gold reached approximately 40.800 Kuwaiti dinars, while a gram of 22-karat gold stood at around 37.400 Kuwaiti dinars. Meanwhile, the price of a kilogram of silver reached approximately 684 Kuwaiti dinars.