Gold futures declined for the fourth consecutive session on Thursday, settling at their lowest level in almost two months. The precious metal has been “weakening” as more traders agree that the Federal Reserve will raise interest rates by a quarter-point. According to Edward Moya, senior market analyst at OANDA, gold prices will not be able to rally significantly until there is confirmation that the economy is slowing down. April delivery of gold futures on Comex, represented by the symbol GCJ23, decreased by 0.59% and closed at $1,826.80 per ounce. This was the lowest closing price since December 30th, as reported by FactSet data.
Gold prices have been on a downward trend since the beginning of 2021, as the markets anticipate the Fed to increase the interest rates by the end of this year. The Fed has maintained its target range for the federal funds rate at 0-0.25% since the pandemic began and has maintained its dovish stance. However, with the economy recovering and the vaccine rollout underway, the Fed has started to discuss the possibility of raising the interest rates. This has created an environment of uncertainty and has put downward pressure on gold prices.
The recent decline in gold prices has been attributed to the increasing yields of US Treasury bonds, which have been rising due to the increasing demand for stocks. An increase in bond yields makes gold less attractive as an investment, as investors prefer to invest in assets which offer higher returns. Additionally, the surge in stocks has reduced the safe-haven appeal of gold, as investors are now more willing to take risks.
The outlook for gold prices remains uncertain, as the markets are still trying to gauge the extent of the economic recovery. The Fed’s stance on the interest rates will be a major factor in determining the direction of gold prices. If the Fed decides to raise the interest rates, it could lead to a further decline in gold prices. However, if the Fed maintains its dovish stance, gold prices could rise as investors seek a safe haven in times of uncertainty.
In conclusion, gold prices have been declining for the past four sessions, settling at their lowest level in almost two months. The decline has been attributed to the increasing yields of US Treasury bonds and the surge in stocks, which have reduced the safe-haven appeal of gold. The outlook for gold prices remains uncertain, as it will depend on the Fed’s stance on the interest rates. Regardless, gold will remain a popular investment choice for investors seeking a safe haven in times of uncertainty.
