Gold Prices Struggle Amid Rising Yields and Hawkish Fed Sentiment
Gold prices struggled to maintain stability last week as market forces worked against it. Spot gold began at $4,383.44 per ounce on Sunday evening and rose briefly before falling back due to increased US Treasury yields, expectations of further Federal Reserve interest rate hikes, and persistent inflation concerns related to energy prices and the US-Iran conflict.
The precious metal continued to face pressure throughout the week as equities rose, bond yields advanced, and a stronger dollar reduced demand for safe-haven assets. Mid-week attempts by gold to stabilize were thwarted by hawkish Fed statements and ongoing inflation worries. The selling pressure intensified on Wednesday and Thursday as US Treasury yields remained high, increasing the opportunity cost of holding gold.
However, gold prices recovered slightly towards the end of the week due to falling oil prices and renewed expectations that the U.S. and Iran could reach an agreement to reopen the Strait of Hormuz. Despite this recovery, spot gold failed to regain the $4,300/oz level before the end of the week.
A recent Kitco survey shows analysts are undecided on the short-term trend for gold prices, while individual investors maintain a bullish outlook despite gold's weak performance over the past week. A majority of surveyed experts predict a rise in gold prices next week, citing market expectations for the Fed and upcoming key US economic data releases.