Gold Holds Near US$4,000
Gold prices held steady near US$4,000 per troy ounce on Thursday (June 25th), after falling below that psychological level the previous day. Spot gold was around US$4,000.13 per ounce in early Asian trading, after plunging nearly 3% in the previous session. This significant decline indicates that pressure on gold remains strong, particularly from the strengthening US dollar and expectations of higher interest rates.
The US dollar was again the main factor weighing on gold. The dollar index strengthened by around 0.8% this week, making dollar-priced gold more expensive for buyers using other currencies. When the dollar strengthens, global demand for gold typically weakens as purchasing costs become higher for non-US investors.
Pressure also comes from changing expectations regarding Federal Reserve policy. Several Fed officials have signaled growing support for interest rate hikes, while new Fed Chairman Kevin Warsh appeared hawkish in his first policy meeting last week. Tighter monetary policy makes gold less attractive because the precious metal doesn't provide the same yield as US government bonds.
This latest decline marks the end of gold's long rally that has lasted for the past three years. Previously, gold had recorded double-digit gains annually and briefly reached a record high near US$5,600 per ounce in late January. However, since then, prices have begun to lose steam and by June had fallen more than 20% from their peak, a level generally considered the start of a bearish phase.
Several major banks have also begun to cut their gold price projections. Goldman Sachs lowered its year-end target to US$4,900 per ounce, while Deutsche Bank cut its fourth-quarter forecast by 17%. Nevertheless, central bank demand remains a key support for gold. Going forward, the market will be watching to see whether gold can hold the US$4,000 area or come under further pressure if the dollar and expectations of a Fed rate hike continue to strengthen. (asd)*
Source: Newsmsker.id
