Spot Gold Falls to 2+ Year Low

All eyes on Fed monetary policy

Gold is exchanged at a Hua Seng Heng store on Yaowarat Road. (Photo: Pornprom Satrabhaya)

The price of spot gold fell to its lowest level in more than two years, under pressure from a strong US dollar and rising US government bond yields amid concerns over the prolonged tightening of monetary policy and the likelihood of a recession.

Bullion hovered above US$1,700 an ounce for most of September, but fell to $1,660.50 on Thursday and traded around $1,654.55 late Friday, according to Hua Seng Heng Futures.

An indicator of dollar strength rose 0.2% and remains near a record high.

Analysts say gold prices are trending lower. They indicated that gold prices have a support level of $1,650 and $1,640 in the next leg, with resistance at $1,680 and $1,690, respectively.

Investors expect the Federal Reserve to continue raising interest rates to keep inflation under control, starting with a 0.75% hike to 3-3.25% at this month’s meeting, marking the third consecutive increase of 0.75%.

Other central banks also raised rates as inflation soared.

Both the IMF and the World Bank have warned that the global economy is approaching a recession.

The World Bank, in particular, cut its outlook for global GDP growth for next year to 0.5%, warning that the biggest rise in global interest rates in 50 years could push the global economy into recession. .

The Gold Research Center polled 14 gold market experts for their views on the weekly domestic gold price trend and key factors to watch. According to the survey, the key factor to watch is the Fed’s monetary policy.

Fed Chairman Jerome Powell insists the bank will continue to aggressively fight inflation and signaled that a rate cut is not happening anytime soon.

The business sector expressed concern that the increases would weaken the economy.

Other factors to consider are key U.S. economic numbers including consumer price index, producer price index, import and export price index, retail sales, industrial production for August and the manufacturing survey, as well as weekly unemployment claims.

The baht continued to depreciate on Friday, trading at 36.99 baht to the dollar, the weakest in 16 years.

The Thailand Stock Exchange index also fell on Friday to 1,630.40 points, a decrease of 0.73%.

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