Why Are Gold Prices Going Down – Gold prices fell to three-month lows on Tuesday as the dollar strengthened on upbeat data on housing starts and building permits for May and investors looked ahead to testimony from Federal Reserve Chairman Jerome Powell, which begins Wednesday.
U.S. housing starts rose 21.7% in May to 1.63 million last month from 1.34 million in April, well above analysts’ expectations for 1.39 million starts, while building permits jumped 5.2% to 1.49 million set. It topped Wall Street expectations of 1.42 million.
Why Are Gold Prices Going Down
The data suggested that the economy remains healthy, which means the Fed is more likely to raise interest rates again in July.
Gold Price Forecast: Major Drop In Sight As Xau/usd Tests Key Support
Comex front-month gold (XAUUSD:CUR) for June delivery closed -1.2% at $1,935.50 an ounce, the lowest settlement since March 16; Comex silver (XAGUSD:CUR) for June delivery closed – 3.6 percent to $23.193 an ounce.
ETFs: (NYSEARCA:GLD), (NYSEARCA:GDX), (GDXJ), (IAU), (NUGT), (PHYS), (GLDM), (AAAU), (SGOL), (BAR), (OUNZ), (SLV), (PSLV), (SIVR), (SIL), (SILJ), (SLVP)
Gold-related stocks were broadly lower, including Gold Fields (GFI) -3.2%, Eldorado Gold (EGO) -3.4%, Barrick Gold (GOLD) -3.9%, AngloGold Ashanti (AU) -4%, Agnico Eagle Mines (AEM) -4.4%, New Gold (NGD) -4.4%, Alamos Gold (AGI) -4.6%, Kinross Gold (KGC) -4.9%, Franco Nevada (FNV) -5%, Equinox Gold (EQX) -5.4%, Harmony Gold (HMY) -5.5%, Iamgold (IAG) -8.2%.
Analysts at Commerzbank cut their gold price forecast by $50 to $2,000 an ounce in the second half of 2023, predicting that the Federal Reserve will raise interest rates again in July and not cut interest rates until the second quarter of next year.
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If you have an ad blocker enabled, you may be blocked from continuing. Please disable your ad blocker and refresh. Gold futures ended slightly lower on Wednesday, falling for a third straight session, as Federal Reserve Chairman Jerome Powell said in testimony before the Senate Banking Committee that continued rate hikes would be “appropriate.”
Meanwhile, concerns over an economic slowdown sent prices for copper, a metal often viewed as an indicator of economic health, below $3 a pound for the first time in more than a year.
Chintan Karnani, research director at Insignia Consultants, said gold traders and investors were focusing on inflation and energy prices.
However, “the prospect of a near-recession in the second half of the year could lead to a pause in rate hikes,” which could support gold prices, he said. Kanani said that as long as the daily close exceeds $1,810, he sees a bullish outlook for gold in the third quarter, with a price target of $1,950 or higher.
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Fed’s Powell continued on Wednesday to argue that a recession is not inevitable because of the interest rate policy set by the central bank. “I don’t think the chances of a recession are particularly high right now,” he said.
In his opening remarks, Powell said the Fed remained determined to take aggressive action against inflation, while pushing back on the notion that the central bank plans to raise interest rates more aggressively.
“We expect continued rate increases to be appropriate; the pace of these changes will continue to depend on incoming data and the changing economic outlook,” Powell said.
“This means that if the previous rate hikes moderate inflation, then we can stop raising rates after the July meeting,” said Karnani of Insignia Consultants.
Gold Prices Weighed Down By Stronger Dollar, Fed Worries
Gold started the year around $1,800 an ounce and peaked above $2,050 an ounce in March before giving up most of those gains in the second quarter. Futures prices have managed to hold above $1,800 an ounce, but a stronger dollar has limited gold’s value.
Commerzbank’s team of commodity analysts said silver appeared to be caught in gold’s slipstream, while demand from emerging markets, particularly the impact of China’s coronavirus lockdown, also weighed on the precious metal. Gold traded little changed so far this week, while silver was down less than 1%.
Analysts at Sevens Report Research wrote in a note on Wednesday: “The new lows in copper prices are a clear negative sign for global economic growth and stocks at the moment, and until we see copper prices stabilize, we will be cautious about these tightening rebounds in stocks. Sustainability casts doubt.” Communication.
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Myra P. Saefong, Assistant Editor, Global Markets, has researched commodities for 20 years. She spends most of her time at the firm writing the daily Futures Moves and Metals Stocks columns, and has written the weekly Commodities Corner column since 2005. Shares of Barrick Gold (NYSE:GOLD ) took a hit Wednesday following the company’s news. Its fourth-quarter 2022 earnings report.
The earnings report got off to a positive start, with earnings of 13 cents per share. That was better than Wall Street’s forecast of 11 cents per share for the quarter. However, that was down from the 35 cents per share it reported a year earlier.
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Unfortunately for GOLD stock, fourth-quarter 2022 revenue is $2.77 billion. That was below analysts’ expectations for revenue of $2.79 billion. This is also down from the $3.31 billion reported in the fourth quarter of 2021.
To coincide with the earnings news, Barrick Gold also announced a share repurchase program. This covers up to $1 billion worth of GOLD shares and will continue for the next 12 months. Previously, the company repurchased $424 million worth of stock through its 2022 buyback program.
Finally, Barrick Gold declared a dividend for investors. 10 cents per share, payable on March 15, 2023. Shareholders must be on record at the market close on February 28, 2023 to be eligible for the dividend.
We’ve got all the hottest stock market stories a Wednesday trader needs to know! That includes why shares of T2 Biosystems (NASDAQ: TTOO ), Credo Technology (NASDAQ: CRDO ) and Tenon Medical (NASDAQ: TNON ) were moving today. All this news is available via the link below!
Weekly Recap: Gold Inches Down, Silver Plunges Nearly 7%
As of the date of publication, William White did not have a position (directly or indirectly) in any securities mentioned herein. The views expressed in this article are those of the author and are subject to publication guidelines. Spot gold was down 0.2 percent at $1,807.19 an ounce by 0101 GMT, having hit a five-month low of $1,783.50 on Friday. U.S. gold futures fell 0.5% to $1,809.50.
The Indian government said on Friday it had raised the basic import duty on gold to 12.5% from 7.5%.
Gold prices edged lower on Monday as a stronger dollar hurt demand for the dollar-denominated bullion and also outweighed support from weaker U.S. Treasury yields.
* Spot gold was down 0.2% at $1,807.19 an ounce by 0101 GMT, having touched a five-month low of $1,783.50 on Friday. U.S. gold futures fell 0.5% to $1,809.50.
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* The dollar hovered near a near two-year high, continuing to make gold less attractive to buyers of other currencies after it played a large role in its worst quarterly performance in more than a year.
* Benchmark U.S. 10-year Treasury yields fell to their lowest level in a month on Friday, boosting prices for non-interest bearing bullion.
* Asian shares opened cautiously on Monday as a run of weak U.S. data suggested downside risks to this week’s June non-farm payrolls report, while chatter over a possible recession still fueled a relief rally in government bonds.
* India’s government said on Friday it had raised basic import duties on gold to 12.5% from 7.5%, as the world’s second-largest consumer of the precious metal seeks to curb demand and reduce its trade deficit.
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* Physical gold traders in India offered deep discounts last week as demand remained weak, with an import tax hike likely to further dampen interest, while activity in top consumer China slowly rebounded after emerging from coronavirus-led restrictions.
* SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, said its holdings fell 0.8% to 1,041.9 tonnes on Friday from 1,050.31 tonnes on Thursday.
* U.S. federal government offices, stock and bond markets and the Federal Reserve will be closed on Monday for the Independence Day holiday.
* Spot silver fell 0.2% to $19.82 an ounce, platinum fell 0.5% to $884.39 an ounce and palladium slipped 0.6% to $1,948.50 an ounce. Gold is highly sought after not only for investment purposes and making jewelry but also in the manufacture of certain electronic and medical devices. As of February 2023, the price of gold is more than 1 US dollar, 870 US dollars per ounce. While down about $100 from its April 2022 high, it’s still up sharply from levels below $100 50 years ago. But what factors will drive the precious metal’s price higher over time?
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