Economists to QNA: Gold Prices Could Remain Under Pressure in Near Future

Doha: Economic experts and analysts in the financial markets have predicted that the gold prices will remain under pressure soon, as markets are waiting critical US economic data that could affect the decisions of future fiscal policies, given the fluctuations in gold prices recently. Speaking to Qatar News Agency , they alluded these fluctuations to multiple socioeconomic factors, highlighting that reducing the allocations of hedge funds for gold is among the foremost economic factors that have recently led to price declines. Gold prices have witnessed a significant decline over the past two days, after rising by more than 19 percent since the beginning of 2024, and about 13 percent in 2023, amid projections that pressure on prices will continue in the upcoming period. Globally, price of gold in spot transactions decreased by 0.3 percent, reaching roughly USD 2315.34 per ounce, while U.S. gold futures fell by 0.6 percent to USD 2328.60. This follows a rise of USD 38.90 last Tuesday, closing at USD 2467.80 per ounce, while in Qatar gold prices were dramatically declined, as the price of 24-carat gold per gram dropped to nearly SAR 281.87 on Friday after reaching around SAR 287.72 on Wednesday. financial advisor Ramzi Qasimia told QNA that the recent decline in gold prices over the past two days was a result of the US dollar regaining some of its strength, following significant declines in gold prices. This comes alongside increased likelihood of the Federal Reserve (the US central bank) reducing interest rates during the upcoming meeting scheduled for September. He alluded the decline in gold prices to profit-taking activities, which have pushed gold down by approximately 3.5 percent to 4 percent over the past two days. This comes especially after prices reached record levels during the past week, highlighting that Investors are seeking safe havens for their investments, particularly amidst rising global inflation rates in most major economies. Qasimia indicated that the US dollar, traditionally a haven and hedge against currency fluctuations, no longer holds the same appeal or value repository for investors. Therefore, some investors see gold as a haven and intend to diversify their investment portfolios by including the gold in them. For his part, Vice Dean of the School of Business for Quality at Al Al-Bayt University of Jordan ,Dr. Omar Gharaibeh, attributed the sharp decline in gold prices yesterday, Friday, and the day before yesterday, Thursday, from USD 2,485 per ounce to settle below USD 2,400, by 3.4 percent, to the rise in US Treasury bond yields by about 1.7 percent to 1.9 percent on all terms, whether two years, 10 years, 20 years, or 30 years, as the rise in Treasury bond yields contributed to the rise of the US dollar. One of the things that strengthened the US dollar was the release of non-farm employment and employment data, as the US economy added 206,000 jobs, exceeding expectations by only 191,000 jobs, which gave an indication that the labor market is still strong and gave time to those in charge of managing monetary policy at the Federal Reserve (the US central bank), especially in light of the uncertainty associated with reducing US interest rates, Gharaibeh told QNA. The political factor played a major role in increasing the strength of the US dollar in light of the current relations between the United States and China, as well as in light of calls by former US President Donald Trump for the Federal Reserve (the US central bank) not to reduce interest rates before next November, noting that all these factors strengthened the rise of the US dollar index from 103.30 to settle at 103.92, which pressured gold prices to fall from USD 2,485 and settle below USD 2,400 per ounce, due to the nature of the inverse relationship between both parties, he added. In turn, financial analyst, Ahmed Aql, stated QNA that the strong decline in many investment assets such as oil, gold, some other metals and even financial markets is due to several reasons, most notably the technical glitch that hit the global In ternet yesterday (Friday) and affected many economic institutions around the world and caused the suspension of many business sector programs, which put pressure on some investors who preferred to wait until this crisis ends completely. Gold is also currently going through a correction phase after achieving new numbers last week, exceeding the level of USD 2,400 per ounce, which made it necessary to re-earn profits and catch a breath to return to attractive prices, or calm down for a return to the rise later, Aql added. He added that with regard to the geopolitical aspect, the results of the upcoming US elections may have a major impact if talk of trade relations between China and the United States returns, which may increase the demand of many countries, individuals and institutions for gold, with the aim of hedging against any negative consequences of any economic competition between the two countries. Gold prices have always seen frequent fluctuations, affected by global economic and political conditions, making them an important indicator for investors and potential buyers. The last major move in interest rates was in July last year, when the Federal Reserve (the US central bank) kept the benchmark short-term borrowing rate in a target range of 5.25 percent to 5.50 percent, its highest level in more than two decades. Source: Qatar News Agency