"Al-Sibaik": Gold prices dropped sharply last week by more than 3 percent, closing at $4,454 per ounce
Al-Sibaik: Gold falls 3% for the week after Warsh's hawkish statements on inflation
Translated by Qiyas from الوسط — Original source
Gold prices ended last week’s trading with a sharp decline, recording its first weekly loss after three consecutive weeks of gains, as gold closed on Friday at $4,454 per ounce, down more than 3 percent on a weekly basis.
A report issued today by Kuwait Mint Company stated that this decline followed a shift in U.S. monetary policy expectations after comments by Federal Reserve Chair Jerome Powell took a tougher stance on inflation, prompting investors to increase bets on a potential U.S. interest rate hike in September.
The report clarified that Powell’s speech marked the main turning point in gold’s movement, as he emphasized that core inflation has not declined sufficiently over recent months, adding that the Federal Reserve still has work to do if policymakers are not convinced that inflation is clearly moving toward the central bank’s 2 percent target.
It noted that these remarks led to higher expectations of a September rate hike, which quickly impacted the U.S. dollar and Treasury yields, putting pressure on gold prices.
The report pointed out that U.S. Treasury yields rose, particularly the two-year yield, following Powell’s speech, while the 10-year yield approached 4.7 percent. It highlighted that rising yields contributed to an increase in the opportunity cost of holding gold, a non-yielding asset, alongside the strengthening of the U.S. dollar.
The report stated that the dollar index rose last week against other major currencies, increasing pressure on dollar-denominated gold and making the metal more expensive for buyers holding other currencies.
It noted that despite the decline, gold continues to be supported by medium- and long-term factors, most notably concerns about U.S. public finances and rising debt levels, alongside geopolitical risks and sustained investment demand for precious metals. It emphasized that concerns about U.S. debt and financial instability remain supportive factors for gold in the long term.
Technically, the Kuwait Mint Company report said gold fell below its 200-day moving average near $4,526 per ounce, signaling the market’s entry into a deeper correction phase after the previous rally.
It mentioned that the $4,450 level will remain the key pivot point this week, as holding it could allow gold to attempt to reclaim the $4,500 level, followed by the $4,520 and $4,526 areas.
It added that a break below $4,450 with sustained trading underneath could increase the risk of a decline toward $4,380, while a move back above $4,550 would send a more positive signal of the correction ending and buyers returning to the market. It viewed the recent drop as having pushed momentum indicators into oversold territory, potentially paving the way for a technical rebound if yields fall or the dollar weakens.
It clarified that market attention this week is focused on U.S. labor market data, primarily the August non-farm payrolls report on Friday, along with jobless claims data and industrial and services activity indicators. These data points are highly significant in shaping monetary policy direction during the September meeting, especially after increased bets on a rate hike.
The Kuwait Mint Company report stated that if the data come in weak, particularly with rising unemployment, bets on a rate hike could recede, giving gold an opportunity to rebound from current levels.
On the geopolitical front, it clarified that developments in the Middle East, Iran, and the Strait of Hormuz will remain influential factors in
Demand for safe-haven assets remains strong, while oil prices will stay under close watch due to their direct impact on U.S. inflation expectations and monetary policy. He confirmed that gold entered the new week after a sharp correction of more than 3%, pressured by a stronger U.S. dollar, rising yields, and repricing of U.S. interest rate expectations, but oversold conditions may offer an opportunity for a technical rebound. He noted that U.S. jobs data will be the main driver of prices, with the $4,450–$4,500 range remaining the key zone in the coming period. On the local front, a report by Dar Al-Subaik highlighted that gold prices in the Kuwaiti market continue to be directly influenced by global ounce movements, alongside fluctuations in the U.S. dollar and shifts in U.S. monetary policy expectations. It noted that the price of 24-karat gold per gram reached approximately 4.315 Kuwaiti dinars (about $144), while 22-karat gold was around 4.620 Kuwaiti dinars (about $132). Meanwhile, the price of a kilogram of silver stood at roughly 0.716 dinars (about $2,333).
