Gold prices hold near two weeks low in early trade

28 Jul 2023 , 09:56 AM

Strong U.S. economic statistics drove up the dollar and bond yields in a high interest-rate environment, holding gold prices near two-week lows on Friday. This led to the non-interest-bearing metal seeing its worst weekly fall in five years.

Spot gold was up 0.2% at $1,948.24 per ounce after falling earlier to its lowest level since July 12 and closing the previous session 1.4% lower. It is on track to have its greatest weekly slump since June 23 after declining 0.5% so far this week.

American gold futures increased by 0.1% to $1,947.30 for an ounce.

After statistics revealed that the U.S. economy expanded more quickly than anticipated in the second quarter, the benchmark 10-year Treasury yields and the U.S. dollar index were supported, perhaps preventing a much-feared recession and raising the possibility that the Fed could raise interest rates further.

Rising Treasury bond yields and U.S. interest rates increase the potential cost of storing gold.

Although inflation slowed this week, the world’s top central banks continued to raise interest rates. However, they have now all adopted a more cautious stance towards future movements, suggesting that the year-long cycle of global monetary tightening may be coming to an end.

As anticipated, the Federal Reserve and the European Central Bank increased interest rates by a quarter percentage point this week, while the Bank of Japan is expected to maintain its ultra-low interest rates on Friday but may make slight adjustments to lengthen the duration of its yield control program.

According to a Reuters poll, analysts have slightly decreased their predictions for the price of gold this year. Concerns about the state of the world economy have reduced expectations for platinum and palladium in 2024.

Weekly decreases were also expected for other precious metals. Platinum maintained at $936.33, palladium increased by 0.1% to $1,241.28, and spot silver remained unchanged at $24.14.

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