Fed effect: gold is heading for its third week in decline

Despite the turmoil in the markets, gold achieves a slight recovery this Friday, August 18, by registering an increase, while the dollar and the yields of bonds they continue to decline.

However, this rebound fails to change the trajectory of the precious metalwhich is heading towards its third weekly drop to the thread The strength of the economic data coming from the US reinforce the expectations that the Federal Reserve (Fed) would keep his interest rates at elevated levels.

The price of gold in cash achieves an increase in 0.3%reaching the u$S1.894,41 per ounce, having touched its point lowest in five months the day before, as reported Ambit. Similarly, US gold futures are also up 0.3%, settling at $1,920.80.

On par and in a turn that benefited to holders of other currencies, the dollar fell 0.2%, which made investment in gold more affordable for those outside of the United States.

Lukman Otunuga, a senior research analyst at FXTM, emphasized that the medium-term course of gold would be largely influenced by the anticipated speech of the Fed chair, Jerome Powell, at the Jackson Hole conference. Meanwhile, the $1,900 level remained a critical benchmark of interest.

Fed effect: the data to take into account

The minutes of the recent meeting of the Federal Reserve revealed that most members still saw “significant upside risks to inflation.” According to CME’s Fedwatch tool, traders were forecasting that the The Federal Reserve would keep rates within the range of 5.25% to 5.5% through 2024.

In an environment in which the returns of the 10-year US Treasury bonds declined from their highest levels since October, gold it maintained its appeal as a non-interest-bearing asset.

The SPDR Gold Trust, the largest gold-backed ETF in the world, suffered a significant decline in its holdings on Thursday, marking its biggest drop since July of the previous year.

Despite the challenges, UBS opted to reduce its projection for the price of gold at the end of the year, going from US$2,100 per ounce to US$1,950. The bank noted that a further price boost would require a revival of ETF demand, and until then, it expected gold to remain range-bound.

However, UBS also noted that purchases of gold from central banks would remain strong for the remainder of the year, having picked up in June after three months of net sales.

As for other precious metals, spot silver achieved a gain of 0.6%, reaching US$22.82 per ounce. Platinum is up 1.4% at $902.29, while palladium also adds 0.6% to $1,224.83. Nevertheless, both metals were heading for weekly declines.