Gold prices increased by 0.4% to $4,377.91 last week, marking the first growth after four consecutive weeks of stagnation. This positive change in the gold market is clearly influenced by the decline in Brent crude oil prices and the easing of inflationary concerns. However, the Federal Reserve's tightening policies remain a barrier to the continuation of this upward trend.
Analysis of the Gold Market Situation
On the last trading day of the week, gold prices in U.S. futures also rose by 0.6% to $4,424.90. Market analysts believe that the decline in oil prices, especially in recent sessions, has played a key role in this rise. Chris Gaffney, President of Global Markets at "Orrick", stated: "Oil has been the main driver of global inflation in recent months. Now, with falling oil prices and reduced inflationary pressures, a significant portion of the trading positions that traders had opened for selling gold have been quickly closed, which has increased buying demand in the gold market.
Challenges Facing Gold
Despite this rise, the path for gold is not smooth. The increase in the U.S. dollar index, which has reached its highest level in seven weeks, raises the cost of purchasing gold for holders of other currencies. Additionally, the recent decision by the Federal Reserve to raise interest rates to a range of 3.75% to 4% and the signals from this institution for continued rate increases in the coming months remain the most significant risk for the gold market. Given that gold is a non-yielding asset, rising interest rates reduce its attractiveness compared to bonds.
According to the "CME FedWatch" tool data, markets now see a 55% chance that the U.S. central bank will raise interest rates again at the October meeting. Meanwhile, the state of physical demand in global markets shows a duality. In India, buyers are refraining from entering the market due to expectations of further price declines and are waiting for more favorable entry points. However, in the Chinese market, investment demand continues strongly, and the "premium" (the difference between domestic prices and global market prices) in this country remains stable.
Currently, gold is testing a resistance level in the range of $4,400 to $4,440, and breaking and stabilizing above this level could pave the way for further increases. Last week, other precious metals also experienced a positive trend; silver prices rose by 2.3% to $66.70, platinum increased by 2.2% to $1,812.50, and palladium rose by 1.5% to $1,310.20.
