Gold Reached 1-Month Low, Hawkish Fed Worries

GOLD REACHED 1-MONTH LOW, HAWKISH FED WORRIES

Gold prices dropped and reached a 1-Month low on Monday as hawkish Fed worries. On the other side copper price also fell due to the weak industrial data from China.

The price of spot gold dropped 0.7% to $ 1,726.06 per ounce, while gold futures fell 0.7% to $ 1,727.50 per ounce by22:20 ET (02:20 ET). Both instruments are traded around the weakest level since the end of July.

The yellow metal prices collapsed last week after the president of the FED, Jerome Powell, dismissed any notion of a dovish tilt by the Fed and warned that US consumers and companies would have to deal with soaring interest as inflation increases. The president of the FED also said that economic growth in the country will probably slow down.

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Powell’s comments stimulated a dollar rally, the greenback exchanging about a 20-year high on Monday. The strength of the dollar, associated with the prospect of an increase in interest rates, seriously detaches the prospects of gold for the year.

More than 60% of traders now expect the Fed to increase the rates by 75 basis points – the higher end of forecasts – in September. The comments of several Fed officials suggest that American interest rates could end the year much greater than 3%, from the current rate of 2.25 to 2.5%.

The focus of this week is turning to US payroll data which is due Friday, which can give Fed more space to increase rates.

Increasing interest rates mostly have weakened the profit of gold this year, although yellow metals saw several benefits during the early Russian-Ukraine conflict. Gold is traded down by almost 5% over the past 12 months, and has declined nearly 20% from the peak of 2022.

Industrial metals also decreased as the strength of the dollar weighed, while Powell’s economic warning scattered doubts over demand for metals.

Copper futures collapsed 1.8% on Monday, with weak industrial data from China that promoted the losses of the red metal. Industrial profits in the country continued their decline in July.

The emphasis is now on the Chinese PMI data later scheduled for this week, which should influence prices.

Copper prices have dropped considerably this year on an economic slowdown in China, the largest importer of the yellow metal.

Gold Reached 1-Month Low, Hawkish Fed Worries