Gold continues to decline… The breach of $2000 depends on the dollar’s decline

Gold continues to decline… The breach of $2000 depends on the dollar’s decline
Gold continues to decline… The breach of $2000 depends on the dollar’s decline
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Gold fell, continuing its decline from a level close to the nine-month peak it reached in the last session, as some investors sought to speculate in a way that guarantees them profit, and the dollar stabilized ahead of the release of US economic data that may determine the Federal Reserve’s path in monetary tightening.
According to Reuters, the spot gold price fell 0.6 percent to $1,926.79 an ounce by 06:11 GMT, after hitting its highest level since late April 2022, Tuesday. US gold futures fell 0.4 percent to $1928.40.
Meanwhile, the dollar index stabilized. The strength of the US currency makes the gold priced in it less attractive to buyers than holders of other currencies.
The market’s focus is now on US fourth-quarter GDP data, due for release today, which could set the pace for rate hikes during the Fed’s January 31-February 1 policy meeting.
“If there are signs that the US economy is slowing and the central bank will soon slow its pace of monetary tightening and cut interest rates, gold could rally,” said Ilya Spivak, head of global macroeconomics at Tasty Life.
But he added, “For prices to breach the $2,000 level, the dollar must continue to decline.”
Most investors expect the bank to raise interest rates by 25 basis points at the policy meeting next week, after slowing its hawkish pace to 50 basis points last month following four consecutive increases of 75 basis points each.
With lower interest rates meaning lower returns on assets such as government bonds, investors may prefer non-yielding gold as a safe haven from interest volatility.
In terms of other precious metals, silver fell 0.6 percent to $23.53 an ounce, and platinum fell 0.3 percent to $1,054.25. Palladium fell 0.8 percent to $1,728.43.
In a related context, data issued by the China Gold Association showed that the country’s gold production in 2022 amounted to 372,048 tons, an increase of 43,065 tons, or 13.09 percent year-on-year.
And according to the New China News Agency, “Xinhua”, that the total consumption of gold in China recorded 100,174 tons during the past year, down 10.63 percent from the previous year, according to what was stated in the data of the China Gold Association.
Consumption of gold jewelry decreased by 8.01 percent year-on-year, to 65,432 tons, while investment in bars and gold coins decreased by 17.23 percent compared to 2021, to reach 25,894 tons.
In 2022, the price of gold remained at high levels in the global market, due to factors such as the geopolitical crisis, the outbreak of the Corona virus pandemic, the slowdown in the global economy, and high inflation rates. In addition, the international company Polymetal, which specializes in gold mining and has assets in Russia and Kazakhstan, is looking to move to the Kazakh capital from New Jersey, while looking for a “friendly” jurisdiction for Russia.
“The Astana International Financial Center is the preferred jurisdiction for legal and tax reasons,” Polymetal said in a statement, given that the company has significant operations in Kazakhstan. And she added, “No decision has been taken yet.”
Operations in Russia account for about 70 percent of the company’s sales, with the rest in Kazakhstan.
The company indicated in July that it planned to sell its Russian unit, but the move is stalled because the Kremlin has prevented the sale of strategic assets by owners registered with jurisdictions that are unfriendly after the Ukraine war. Polymetal and its shareholders, including billionaire Alexander Nessis, have not been targeted by European or US sanctions.

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