Dar Al-Sibaak: Upcoming inflation and jobs data may determine the direction of the precious metal
Gold prices ended last week’s trading session lower, closing at $4,285 per ounce, as markets awaited the direction of the US Federal Reserve’s monetary policy alongside upcoming inflation and economic activity data.
In a report issued on Sunday, Kuwait’s Dar Al-Sabaik stated that gold experienced notable volatility during the week, facing selling pressure due to a stronger US dollar and higher yields on US assets, before recovering part of its losses by the end of trading. The company noted that gold prices fell to levels nearing $4,245 per ounce before improving slightly, yet remained below the $4,300 threshold, recording a weekly loss of nearly 2 percent.
Dar Al-Sabaik attributed part of this movement to the continued impact of the Fed’s recent decision to raise interest rates by 25 basis points, bringing the target range to between 3.75 and 4 percent. Additionally, comments from several central bank officials kept the possibility of another rate hike this year on the table. The report highlighted that the Fed’s updated projections showed 16 of 18 officials expecting at least one rate increase this year, a factor weighing on gold as a non-yielding asset.
It pointed out that rising yields on dollar-denominated assets increase the opportunity cost of holding gold. Meanwhile, higher yields on US Treasury bonds, particularly the 10-year note, kept markets anticipating the future path of monetary policy.
**Dollar and Oil in the Spotlight**
The report emphasized that the dollar’s performance remains a key factor influencing gold prices, as a stronger US currency typically increases the cost of the metal for holders of other currencies. Oil prices have also become a crucial factor in shaping market expectations regarding inflation and monetary policy, as rising energy costs could reignite inflationary pressures and reinforce expectations that interest rates will remain elevated for longer.
Furthermore, geopolitical developments in the Middle East continue to influence market movements. While heightened uncertainty may boost demand for gold as a risk-hedging asset, its impact during the week was overshadowed by the pressures from a strong dollar and rising bond yields.
**Upcoming Economic Data**
Investors are turning their attention this week to a package of US economic data, led by the Personal Consumption Expenditures (PCE) price index, a key inflation gauge monitored by the Fed, alongside personal income and spending data. Markets are also awaiting the US jobs report and labor market data, as well as the Industrial Production index, consumer confidence figures, and weekly jobless claims.
Dar Al-Sabaik explained that the significance of these data points lies in their potential to influence market expectations regarding the Fed’s future decisions. Continued strength in the US economy and persistent inflationary pressures could support the dollar and yields, thereby increasing pressure on gold.
**$4,300 as Technical Resistance**
On the technical front, the report noted that gold closed the week at $4,385 per ounce, with the $4,300 level representing a key resistance zone, coinciding with several moving averages ranging between $4,300 and $4,354. If gold breaks above $4,300 and sustains its position, attention may shift to the $4,350 and $4,354 levels, followed by the $4,400 mark, which constitutes a significant technical barrier.
Conversely, the $4,245 level serves as a nearby support level, which was tested last week, followed by the $4,230 to $4,200 range as a major support zone. The report indicated that a break below this range could pave the way for testing lower price levels, with $4,000 remaining as a distant technical level to watch.
Weekly technical analyses showed gold continuing to trade below several key daily moving averages, reflecting ongoing short-term pressures. Meanwhile, the dollar’s movement and bond yields remain the primary determinants of the metal’s direction in the coming period.
**Local Gold Prices**
Locally, Dar Al-Sabaik reported that gold prices in the Kuwaiti market continue to be influenced by global ounce movements, fluctuations in the dollar exchange rate, and expectations regarding US monetary policy.
According to the report, the price of 24-karat gold gram reached approximately 42.7 Kuwaiti dinars, equivalent to about $139, while the 22-karat gold gram stood at around 39.32 dinars, or roughly $127. Additionally, the price of a kilogram of silver reached approximately 696 dinars, equivalent to about $2,261.
