Gold and Silver prices hit a monthly low on Thursday morning given the recovering U.S. dollar and bond yields coupled with the prospects of another Federal Reserve rate hike in September.
Gold, 2-hour chart
The prices of the yellow metal fell as low as $1,915/oz, its lowest since early July, down 3% in the last few weeks, and recording a cumulative loss of 8% after topping at $2,080/oz in early May 2023 in favor of the greenback.
Silver has been following gold’s downward momentum, with its prices sliding to nearly $22,50/oz yesterday, down $3/oz or 11% in the last month and retreating by over 15% from 2023’s highs of $26 hit in early May.
Investors have fled the non-yielding and dollar-denominated precious metals in favor of the U.S. dollar given the hawkish comments from policymakers, the resilient U.S. economy, and labor market, which are increasing the possibilities of more rate hikes by the Federal Reserve.
Bullion investors will now be focused on the key U.S. inflation readings for more economic cues on the world’s largest economy and the path of monetary policy, firstly, the U.S. consumer price index (CPI) inflation data due on Thursday, and secondly, the U.S. producer price index (PPI) inflation data due on Friday.
Higher interest rates increase the opportunity cost of holding non-yielding gold and silver and weigh positively on the greenback, which makes the dollar-denominated precious metals more expensive for buyers with foreign currency.
Gold has also failed to receive safety bets as global investment risk sentiment deteriorated after Moody’s downgraded several U.S. banks and as Chinese trade data disappointed this week, with investors choosing the safety of the dollar.
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