Wednesday marked the beginning of the fifth consecutive downtrend for gold prices, as strong US statistics negatively affected the allure of the unprofitable metal. Meanwhile, hawkish comments from the Federal Reserve predict a rate hike.
Spot gold has held steady over time at $1,724.18 an ounce, trading above a one-month low reached on Monday. In August, gold fell sharply by 2.3%.
US gold futures fell significantly 0.1% to $1,735.40.
“According to an expert analyzing the current situation, the Fed wants to create multiple risks around the monetary outlook by focusing on higher prices and providing less specific guidance for the future.”
According to Spivak, this explains why gold weakened and the dollar strengthened.
The influential New York Federal Reserve chief predicted on Tuesday that in order to maintain the benchmark interest rate until the end of 2023, the US central bank is likely to continue raising it “a little higher” from 3.5%.
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Although gold is considered a hedge against inflation, the rate increases the opportunity cost of holding bullion while trying to strengthen the currency.
Recent data showing that jobs in the US increased in July and consumer confidence rose more than expected in August boosted hopes that the Federal Reserve will maintain its strong monetary stance.
Although the dollar index slipped 0.2%, it is still close to its two-decade high reached on Monday.
Spot silver experienced its biggest drop since September 2020, dropping 0.1% to $18.48 an ounce and losing 9% in August.
Platinum rose 0.9% to $855.50, but was still down about 5% during the month. The price of one ounce of palladium rose 1.9 percent to $2,128.08.
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