The dollar strengthened and Treasury yields stayed high on Wednesday, which caused gold prices to decline from their six-month high. Investors also took into account the deteriorating COVID-19 situation in top bullion consumer China.
Spot gold hit its highest level since the end of June on Tuesday and was down 0.7% at $1,800.49 per ounce by 0954 GMT. To $1,807.50, U.S. gold futures saw a 0.9% decline. Benchmark 10-year rates remained close to their highest levels in more than a month as the dollar index increased by 0.1%. According to Carlo Alberto De Casa, external analyst at Kinesis Money, gold is priced between $1,790 and $1,830 and is awaiting a new market driver.
On the assumption that the U.S. Federal Reserve will decrease the rate of interest rate increases, the price of gold has increased by almost $200 from a more than two-year low in late September. This has increased interest in the non-yielding asset.
“The COVID issue in China could get worse again, which could be bad for gold. However, this can also force (central) banks to become more dovish. Which would be good for gold “De Casa threw in.
China removed the COVID-19 quarantine requirement for incoming travelers on Monday. Despite hospitals and cemeteries facing severe strain as a growing COVID-19 wave depleted supplies.
Accordingly, key variables influencing gold prices in 2023 will include the performance of the dollar. Inflation statistics, the Fed’s rate hike trajectory, events in China, and geopolitical conflict.
Gold and Platinum
Traders await Thursday’s initial unemployment claims data and the U.S. report on pending home sales. Both of which are coming later today. Spot silver fell 1.7% to $23.6451 per ounce and platinum fell 0.3% to $1,017.05 in other precious metals. 1.1% less palladium was sold for $1,809.80.
Platinum is both more valuable and rarer than gold, yet neither usefulness nor rarity is the main factor in determining the price of precious metals. The ratio of gold to platinum prices since 1986 is shown below. You can see that, previous to 2010, gold was worth between 45% and roughly the same as platinum. But over the past ten years, it has consistently increased in value in comparison to platinum.
Particularly for gold, the health of the US economy has a significant bearing on the price of precious metals. Prices frequently increase when the US economy is struggling and the dollar is weak. Due to its popularity as an investment, prices typically increase first. The less valuable metal trades at a fraction of the price. Which may change over time in reaction to shifting economic conditions and tighter supply.