Explore how central bank policies are driving gold prices higher, impacting investors and global markets. Stay informed on this financial trend.
The price of gold has climbed above the $1,800 mark this Friday, buoyed by expectations that central banks might maintain lower interest rates to mitigate growth risks. Despite this, the past week has seen gold prices decline due to a stronger dollar, as investors assess the US Federal Reserve’s potential timeline for tapering bond purchases.
SPI Asset Management: Gold Sees Increased Buying at Lows
Spot gold has increased by 0.38% to reach $1,800 per ounce. However, with a weekly decline of 1.4%, it is on track for its first weekly drop in five weeks. Meanwhile, US gold futures have climbed to $1,802. The dollar’s slight softening during the day has made gold more appealing to those holding alternative currencies.
Stephen Innes, managing partner at SPI Asset Management, commented that gold is witnessing more buying at its lower levels, as central banks exhibit no urgency in raising interest rates. He stated, “Growth remains a significant concern for central banks.” In an environment where interest rates are low, gold, as a non-yielding asset, tends to perform better. Investors often view it as a safeguard against inflation, which is expected to rise due to substantial stimulus measures.
Citi Research: Potential Decline in Gold Prices
Recent data from the Federal Reserve indicates a slight contraction in the US economy in August. However, the signals remain mixed as several Fed officials have noted that the recent slowdown in job growth shouldn’t impede plans to taper asset purchases this year.
Despite increasing macroeconomic risks, the Federal Reserve is not expected to abandon its 2021 tapering plans, according to a note from Citi Research. They anticipate that gold prices could drop to around $1,700 in the fourth quarter of the year.
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