- Gold futures fell below $2,400 per ounce, ending the trading week as traders took profits ahead of the weekend.
- Prior to the sharp sell-off, gold prices were eyeing new record highs last week.
- However, it wasn’t just the yellow metal that saw declines; broader financial markets, including benchmark indices and crude oil, also dropped on Friday.
According to gold trading platforms, gold futures fell by 2.39%, reaching $2,397.80 per ounce at 13:39 GMT on Friday in the Comex section of the New York Mercantile Exchange. This led to a modest weekly loss of about 0.7%, but prices are still up nearly 16% year-to-date in 2024. Similarly, silver prices, gold’s sister commodity, fell below $30 per ounce and may struggle to maintain $29. Silver futures dropped by 3.62% to $29.13 per ounce, resulting in a weekly decline of 6%, though they are still up 21% for the year.
The main factor affecting gold prices was profit-taking by traders. Additionally, both the dollar and US Treasury yields rose. According to reliable trading platforms, the US Dollar Index (DXY), which measures the dollar against a basket of other major currencies, rose by 0.17% to 104.35. The index is set to achieve a weekly gain of 0.25%, boosting its year-to-date performance to 3%.
Usually, a strong dollar is bearish for commodities priced in US dollars because it makes them more expensive for foreign investors to buy.
Another prominent factor in the gold market was the rise in US Treasury yields across the board, with the 10-year note yield climbing by 4.9 basis points to 4.237%. Recently, the 2-year note yield exceeded 4.5%, while the 30-year bond yield reached 4.45%. This upward movement in yields could be surprising, as investors signal to the Federal Reserve to cut US interest rates at the Federal Open Market Committee (FOMC) meeting in September. Typically, gold prices are sensitive to interest rate fluctuations as they affect the opportunity cost of holding non-yielding bullion.
Despite the sharp sell-off, market analysts expect gold prices to rise. In a weekly note, Metals Focus stated, “As physical markets gradually adapt to higher prices and consequently become convinced that the upward trend is here to stay, gold’s fundamentals should improve.”
Gold Price Forecast and Analysis Today:
Despite the recent sell-off, the overall trend for gold will remain bullish supported by movement around and above the resistance of $2400 per ounce. With geopolitical tensions rising and central bank gold purchases returning to the weak US dollar again, the gold market may find an opportunity to return to the path of record bullish levels. Decisively, we still prefer to buy gold from every bearish level.
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