Posted On Monday, Sep 04, 2023
International gold prices were on the backfoot for most of August touching lows of $1890 per ounce before ending the month only 0.58% lower at $1944.2 per ounce. The biggest headwind for the precious metal during the month was the yield on US 10-year inflation-protected Treasuries which touched 2% for the first time since the Global Financial Crisis of 2008 after starting the month at 1.6%. Dollar too strengthened in August from 102 levels to 104, partly driven by the bond market, but also reflecting the relatively better economic outlook of the US compared to Eurozone and China. However, both US yields and US dollar moderated by the end of the month. Domestic gold prices closed the month 0.22% lower, aided by the Indian Rupee which depreciated by 0.52%.
Outlook for September
While investors broadly expect the Fed to keep rates on hold in September , they have also pushed back bets of interest rate cuts to June 2024. More rate hikes or bets for more rate hikes by the Federal Reserve and growing narrative of a US soft landing will keep a lid on prices in the near term. The downside, meanwhile, seems limited in the wake of worries about Fed overtightening, a potential US recession, rising US debt levels, sticky inflation, central bank gold buying and geopolitical tensions. Investors can continue to buy on dips and build their gold allocation. With savings from the pandemic era dwindling, credit card debt rising and interest rates staying high, risk of a hard landing for the US economy remains. As the street acknowledges the slowdown and as it that starts reflecting in asset markets, the Fed may be compelled to take a u turn, bringing renewed bids for gold.
Data Source: World Gold Council
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Posted On Monday, Sep 04, 2023
International gold prices were on the backfoot for most of August touching lows of $1890 per ounce before ending the month only 0.58% lower at $1944.2 per ounce.
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