Global gold price today, Saturday, October 25, 1405; Why did gold become cheap despite the fall of the dollar?

The global gold market ended last week with a price drop; What happened despite the weakening of the dollar and the fall in the yield of US Treasury bonds. Rising oil prices, concerns about continued inflation and changing expectations about the Federal Reserve's monetary policy have complicated the precious metals market equations.

Sefir Arjan - Economic Group: Global gold prices decreased at the end of trading on Friday, and this precious metal registered a downward performance for the week as a whole. The increase in the price of crude oil and the concern about the continuation of inflationary pressures in the United States partially neutralized the supportive effect of the decline in the value of the dollar and the fall in the yield of treasury bonds.

According to the published report of global market transactions, each ounce of cash gold reached 4,165 dollars and 40 cents at the end of Friday with a decrease of 0.1%. On the other hand, gold futures closed with a growth of 0.4% at the level of 4,186 dollars and 70 cents.

Despite the increase in the price of futures contracts on the last trading day of the week, both indices decreased by 0.7% in the week as a whole; A matter that shows that the factors limiting the growth of gold are still active in the market.

Gold's weekly performance was influenced by several different factors. On the one hand, the decline in the value of the dollar and the fall in the yield of US treasury bonds reduced the attractiveness of holding alternative assets and helped to support the price of gold. On the other hand, the growth of oil prices and the concern of inflation again put the possibility of continuation of strict monetary policy in the focus of traders' attention.

Unlike bonds, gold does not pay periodic interest; Therefore, when interest rates are expected to remain at high levels, the opportunity cost of holding this metal increases. On the other hand, a decrease in interest rates or a decrease in yield on interest-bearing assets can usually provide support for the price of gold.

For this reason, the market was between two opposing factors last week, and finally, the pressure caused by inflationary concerns and the increase in energy prices made gold unable to finish the week with price growth.

The release of US inflation data was one of the most important factors affecting last week's transactions. According to the figures presented in the Baban report, the total US consumer price index increased by 3.7% in September compared to the same period last year, and the annual growth of the core consumer price index reached 2.6%.

Also, the US total producer price index registered an annual growth of 6.3% in this month. The increase in energy prices is one of the most important factors in the growth of the total inflation index.

The continuation of inflationary pressures can make it more difficult for the Federal Reserve to decide to cut interest rates. If the US central bank continues to keep interest rates high to curb inflation, this situation could cost gold. On the other hand, reducing the probability of interest rate increase or strengthening expectations for monetary policy easing can help the price of this metal to grow.

According to the reported information, the possibility of a 0.25 percentage point increase in the interest rate in the upcoming meeting of the Federal Reserve has decreased after the publication of some statements of the monetary authorities. According to data attributed to the Fedwatch tool of the Chicago Mercantile Exchange, this probability had increased from about 28 percent to nearly 17 percent.

However, these figures reflect market expectations at the time of the report and do not necessarily mean a definitive decision by the Fed.

The energy market also affected the trend of gold trading during the last week. According to Babas report, Brent oil futures increased by 4.8% in the week as a whole, and US West Texas Intermediate crude oil also experienced a growth of 10.9%.

The increase in oil prices can affect the gold market in two ways. First, rising energy costs may increase inflationary pressures and strengthen the likelihood of continued high interest rates. Second, rising geopolitical tensions and concerns about the security of energy supply could increase demand for safe-haven assets, including gold.

These two effects sometimes act in opposite directions. In a situation where concerns about inflation and interest rates prevail over the market, the increase in oil can end up at the expense of gold; But if demand for safe-haven assets increases, these same developments may support the price of the precious metal.

Therefore, the reaction of gold to the developments of the energy market depends on whether the traders focus more on the inflationary consequences of oil or on the increase of political and economic risks.

The weekly decline in the price of gold shows that the weakening of the dollar alone was not enough to bring the market back to the upward trend. Traders will continue to monitor US inflation data, oil price developments, Treasury bond yields and statements from Federal Reserve officials.

If signs of easing inflation strengthen and expectations for lower interest rates increase, gold may find support in these conditions. On the other hand, the continued growth of energy prices and inflation remaining at high levels can keep the pressure on this metal.

In general, the direction of the next movement of global gold depends on the outcome of economic and political factors, and it is not possible to predict the definite future trend of the price based only on the weekly drop or decline in the value of the dollar.

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