The price of gold decreased on Monday (25/09) as the US dollar strengthened and US bond yields rose due to the Federal Reserve's (Fed) outlook for higher interest rates over a longer period.
At the close of trading on Monday, spot gold contracts fell by 0.5% to $1,915.61 per ounce. Futures gold contracts lost 0.5% to $1,936.6 per ounce.
Everett Millman, Market Analyst at Gainesville Coins, noted: "The Fed and global central banks with a hawkish stance are currently restraining gold."
Mr. Millman predicts that the price of gold will fluctuate between $1,910 and $1,950 per ounce for the remainder of this quarter.
Fed officials warned on September 22 about the possibility of raising interest rates further even after voting to keep interest rates steady the previous week, with three key policymakers stating they are still uncertain about whether the battle against inflation has ended.
Gold tends to perform poorly when higher interest rates boost the yields of safe-haven assets such as US bonds.
The US dollar index rose by 0.3%, while the yield on the 10-year US Treasury bond approached a 16-year high.
"My fundamental forecast is that gold will reach all-time highs in 2024, provided we see at least a mild global economic recession. If we fall into a recession, the Fed will be forced to lower interest rates sooner," Mr. Millman added.
The market is now focusing on the Personal Consumption Expenditures (PCE) price index, a favored inflation measure by the Fed, which is scheduled to be released on September 29.
Reflecting investor sentiment, the holdings of the SPDR Gold Trust (NYSE: GLD), the world's largest gold ETF, have fallen to their lowest level since January 2020.
At the close of trading on Monday, spot gold contracts fell by 0.5% to $1,915.61 per ounce. Futures gold contracts lost 0.5% to $1,936.6 per ounce.
Everett Millman, Market Analyst at Gainesville Coins, noted: "The Fed and global central banks with a hawkish stance are currently restraining gold."
Mr. Millman predicts that the price of gold will fluctuate between $1,910 and $1,950 per ounce for the remainder of this quarter.
Fed officials warned on September 22 about the possibility of raising interest rates further even after voting to keep interest rates steady the previous week, with three key policymakers stating they are still uncertain about whether the battle against inflation has ended.
Gold tends to perform poorly when higher interest rates boost the yields of safe-haven assets such as US bonds.
The US dollar index rose by 0.3%, while the yield on the 10-year US Treasury bond approached a 16-year high.
"My fundamental forecast is that gold will reach all-time highs in 2024, provided we see at least a mild global economic recession. If we fall into a recession, the Fed will be forced to lower interest rates sooner," Mr. Millman added.
The market is now focusing on the Personal Consumption Expenditures (PCE) price index, a favored inflation measure by the Fed, which is scheduled to be released on September 29.
Reflecting investor sentiment, the holdings of the SPDR Gold Trust (NYSE: GLD), the world's largest gold ETF, have fallen to their lowest level since January 2020.
